Direct materials cost per unit = Change in cost ÷ Change in activity = ($281,600 - $246,400) ÷ (8,000 - 7,000 units) = $35,200 ÷ 1,000 units = $35.20 per unit Direct labor cost per unit = Change in cost ÷ Change in activity = ($400,800 - $350,700) ÷ (8,000 units - 7,000 units) = $50,100 ÷ 1,000 units = $50.10 per unit Variable manufacturing overhead cost per unit = Change in cost ÷ Change in activity = ($872,000 - $860,300) ÷ (8,000 units - 7,000 units) = $11,700 ÷ 1,000 units = $11.70 per unit Fixed cost element of manufacturing overhead = Total cost - Variable cost element = $872,000 - 8,000 units × $11.70 per unit = $872,000 - $93,600 = $778,400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 02-03 Understand cost behavior patterns including variable costs; fixed costs; and mixed costs. Learning Objective: 02-04 Analyze a mixed cost using a scattergraph plot and the high-low method. Level: 2 Medium 68. Haras Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $141.30 per unit. The best estimate of the total variable cost per unit is:
Direct materials cost per unit = Change in cost ÷ Change in activity = ($281,600 - $246,400) ÷ (8,000 - 7,000 units) = $35,200 ÷ 1,000 units = $35.20 per unit Direct labor cost per unit = Change in cost ÷ Change in activity = ($400,800 - $350,700) ÷ (8,000 units - 7,000 units) = $50,100 ÷ 1,000 units = $50.10 per unit Variable manufacturing overhead cost per unit = Change in cost ÷ Change in activity = ($872,000 - $860,300) ÷ (8,000 units - 7,000 units) = $11,700 ÷ 1,000 units = $11.70 per unit Fixed cost element of manufacturing overhead = Total cost - Variable cost element = $872,000 - 8,000 units × $11.70 per unit = $872,000 - $93,600 = $778,400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 02-03 Understand cost behavior patterns including variable costs; fixed costs; and mixed costs. Learning Objective: 02-04 Analyze a mixed cost using a scattergraph plot and the high-low method. Level: 2 Medium 68. Haras Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $141.30 per unit. The best estimate of the total variable cost per unit is:
Test-Bank-for-Managerial-Accounting-for-Managers-3rd-Edition-by-Noreen.docx