Eddy Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

Production volume 6,000 units 7,000 units
Direct materials $582,600 $679,700
Direct labor $136,200 $158,900
Manufacturing overhead $691,800 $714,700

The best estimate of the total variable manufacturing cost per unit is:

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

Question

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DeniceSandidge DeniceSandidge · Answer 1 · 2020-02-17T12:06:29+01:00

Answer:

variable manufacturing cost per unit = $142.70

so correct option is C) $142.70

Step-by-step explanation:

solution

we get here first direct materials cost per unit that is express as

direct materials cost per unit = Change in cost ÷ Change in activity .......1

put here value

direct materials cost per unit = [tex]\frac{679700-582600}{7000-6000}[/tex]

direct materials cost per unit = $97.10 per unit

and now we get here direct labor cost per unit that is

Direct labor cost per unit = Change in cost ÷ Change in activity ........2

Direct labor cost per unit = [tex]\frac{158900-136200}{7000-6000}[/tex]

Direct labor cost per unit = $22.70 per unit

and

now we get variable manufacturing overhead per unit that is

variable manufacturing overhead per unit = Change in cost ÷ Change in activity .........3

variable manufacturing overhead per unit = [tex]\frac{714700-691800}{7000-6000}[/tex]

variable manufacturing overhead per unit = $22.90 per unit

so that total variable manufacturing cost per unit will be

total variable manufacturing cost per unit = 22.90 + $22.70 + $97.10 total variable manufacturing cost per unit = $142.70

so correct option is C) $142.70