Question

Baker 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 1,030 units 4,030 units Direct materials $ 31.20 per unit $ 31.20 per unit Direct labor $ 40.50 per unit $ 40.50 per unit Manufacturing overhead $ 65.00 per unit $ 35.00 per unit The best estimate of the total variable manufacturing cost per unit is: $96.40 $24.70 $71.70 $31.20

Answer 1

$96.40

Step-by-step explanation:

The computation of the best estimate of the total variable manufacturing cost per unit which is shown below:

At 1,030 units

The total cost is

= (Direct material per unit + direct labor per unit + manufacturing cost per unit) × number of units

= ($31.20 per unit + $40.50 per unit + $65 per unit) × 1,030 units

= $140,801

At 4,030 units

The total cost is

= (Direct material per unit + direct labor per unit + manufacturing cost per unit) × number of units

= ($31.20 per unit + $40.50 per unit + $35 per unit) × 4,030 units

= $430,001

So, the best estimate would be

= ($430,001 - $140,801) ÷ (4,030 units - 1,030 units)

= $96.40