Question

Bakan Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume 8,600 units 9,600 units Direct materials $ 98.70 per unit $ 98.70 per unit Direct labor $ 25.60 per unit $ 25.60 per unit Manufacturing overhead $ 73.20 per unit $ 69.20 per unit The best estimate of the total variable manufacturing cost per unit is:_______

Answer 1

$159.1

Step-by-step explanation:

The computation of the total variable manufacturing cost per unit is shown below;

At 8,600 units,

The total cos is

= (Direct material per unit + Direct labor per unit + Manufacturing cost per unit) × Number of units

= ($98.70 per unit + $25.60 per unit + $73.20 per unit) × 8,600 units

= $197.5 per unit × 8,600 units

= $1,698,500

At 9,600 units

The Total cost

= ($98.70 per unit + $25.60 per unit + $69.20) × 9,600 units

= $193.5 per unit × 9,600 units

= $1,857,600

So, the best estimated would be;

= ($1857,600 - $1,698,500) ÷ (9,600 units - 8,600 units)

= $159,100 ÷ 1,000 units

= $159.1