Eddy 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)$22.90
B)$119.80
C)$142.70
D)$97.10

Question

Eddy 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)$22.90 
B)$119.80 
C)$142.70 
D)$97.10

Quizplus · Accepted Answer

Direct materials cost per unit = Change in cost ÷ Change in activity
= ($679, 700 - $582, 600)÷ (7, 000 units - 6, 000 units)
= $97, 100 ÷ 1, 000 per unit
= $97.10 per unit
Direct labor cost per unit = Change in cost ÷ Change in activity
= ($158, 900 - $136, 200)÷ (7, 000 units - 6, 000 units)
= $22, 700 ÷ 1, 000 units
= $22.70 per unit
Variable manufacturing overhead per unit = Change in cost ÷ Change in activity
= ($714, 700 - $691, 800)÷ (7, 000 units - 6, 000 units)
= $22, 900 ÷ 1, 000 units
= $22.90 per unit
Total variable manufacturing cost per unit = Direct materials per unit + Direct labor per unit + Variable manufacturing overhead per unit = $97.10 per unit + $22.70 per unit + $22.90 per unit
= $142.70 per unit

Eddy Corporation Has Provided the Following Production and Total Cost