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Farmington Corporation

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Farmington Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

Production volume 7,000 units 9,000 units
Direct materials 223,300 287,100
Direct labor 129,500 166,500
Manufacturing overhead 924,800 961,400

The best estimate of the total cost to manufacture 7,300 units is closest to:

1,298,210
1,164,620
1,332,354.285714
1,426,310

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Solution Summary

Farmington Corporation's figures are studied.

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Hello!

Please find the solution below:

Total Costs at 7,000 Units = $223,300 + $129,500 + $924,800 = $1,277,600

Total Cost for 9,000 units = $287,100 + $166,500 + $961,400 = $1,415,000

Using the High-Low Method:

Variable Cost = Change in Cost / Change in ...

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