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