The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: The best estimate of the total variable manufacturing cost per unit is: (Round your intermediate calculations to 2 decimal places.)
A) $132.70
B) $88.40
C) $23.70
D) $109.00

Question

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product:  The best estimate of the total variable manufacturing cost per unit is: (Round your intermediate calculations to 2 decimal places.)
A) $132.70 
B) $88.40 
C) $23.70 
D) $109.00

Quizplus · Accepted Answer

Total manufacturing overhead at 2,000 units = 2,000 units × $86.90 per unit = $173,800
Total manufacturing overhead at 4,000 units = 4,000 units × $55.30 per unit = $221,200
 11eacbfc_c8ad_2a0d_8ffe_df87e54d18fb_TB7552_00 Variable cost per unit = Change in cost ÷ Change in activity
= $47,400 ÷ 2,000 units
= $23.70 per unit
Total variable cost per unit = Direct materials per unit + Direct labor per unit + variable manufacturing overhead per unit
= $88.40 + $20.60 + $23.70
= $132.70

The Following Production and Average Cost Data for Two Levels