(Appendix 5A) 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:
A) $132.70
B) $88.40
C) $23.70
D) $109.00

Question

(Appendix 5A) 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:
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
 11ea7761_1888_e90d_81a5_3b4f2fd38ec6_TB2580_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

(Appendix 5A) the Following Production and Average Cost Data for Two