The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: The best estimate of the total variable manufacturing cost per unit is:
A)$39.10
B)$27.70
C)$11.40
D)$13.20

Question

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product:  The best estimate of the total variable manufacturing cost per unit is:
A)$39.10 
B)$27.70 
C)$11.40 
D)$13.20

Quizplus · Accepted Answer

Total manufacturing overhead at 1, 000 units = 1, 000 units × $65.40 per unit = $65, 400
Total manufacturing overhead at 3, 000 units = 3, 000 units × $29.40 per unit = $88, 200
 11eaa0c8_963d_1484_9cb2_1f6f4f97504a_TB2487_00 Variable cost per unit = Change in cost ÷ Change in activity
= $22, 800 ÷ 2, 000 units
= $11.40 per unit
Total variable cost per unit = Direct materials per unit + Direct labor per unit + variable manufacturing overhead per unit
= $13.20 + $14.50 + $11.40
= $39.10

The Following Production and Average Cost Data for Two Levels