Question

Baker 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 $194,400 $226,800 Direct labor $74,400 $86,800 Manufacturing overhead $758,400 $779,800 The best estimate of the total cost to manufacture 6,300 units is closest to: $984,060 $1,031,310 $1,047,060 $1,078,560

Answer 1

$1,078,560

Step-by-step explanation:

The computation of the total manufacturing cost is shown below:

= Direct material + direct labor + manufacturing overhead cost

where,

Direct material = cost of 6,000 units × (estimated units ÷ given units)

= $194,400 × (6,300 units ÷ 6,000 units)

= $204,120

Direct Labor = cost of 6,000 units × (estimated units ÷ given units)

= $74,400 × (6,300 units ÷ 6,000 units)

= $78,120

Manufacturing overhead = cost of 6,000 units × (estimated units ÷ given units)

= $758,400 × (6,300 units ÷ 6,000 units)

= $796,320

Now put these values to the above formula

So, the value would equal to

= $204,120 + $78,120 + $796,320

= $1,078,560