Edal Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total variable manufacturing cost per unit is:
A) $63.70
B) $84.40
C) $53.30
D) $20.70

Question

Edal Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product.  The best estimate of the total variable manufacturing cost per unit is:
A) $63.70 
B) $84.40 
C) $53.30 
D) $20.70

Quizplus · Accepted Answer

Direct materials cost per unit = Change in cost ÷ Change in activity
= ($319,800 - $266,500) ÷ (6,000 units - 5,000 units)
= $53,300 ÷ 1,000 units
= $53.30 per unit
Direct labor cost per unit = Change in cost ÷ Change in activity
= ($62,400 - $52,000) ÷ (6,000 units - 5,000 units)
= $10,400 ÷ 1,000 units
= $10.40 per unit
Variable manufacturing overhead per unit = Change in cost ÷ Change in activity
= ($769,200 - $748,500) ÷ (6,000 units - 5,000 units)
= $20,700 ÷ 1,000 units
= $20.70 per unit
Total variable manufacturing cost per unit = Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit = $53.30 per unit + $10.40 per unit + $20.70 per unit
= $84.40 per unit

Edal Corporation Has Provided the Following Production and Total Cost