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 3,000 units 4,000 units Direct materials $ 86.30 per unit $ 86.30 per unit Direct labor $ 26.40 per unit $ 26.40 per unit Manufacturing overhead (fixed and variable) $ 75.90 per unit $ 60.40 per unit The best estimate of the total variable manufacturing cost per unit is: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

$13.90

Explanation:

The computation of total variable manufacturing cost per unit is shown below:-

Production volume a                   $3,000                 $4,000

Direct material                             $86.30                  $86.30

Direct labor                                  $26,40                   $26.40

Manufacturing overhead b         $75.90                   $60.40

Total cost a × b                            $227,700               $241,600

Difference in total cost c                                            $13,900

Difference in production volume d                            1,000 units

Variable cost per unit c ÷ d                                         $13.90