What is the variable manufacturing cost per unit and total cost for Babson Corporation?
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Babson 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 5,000 units 6,000 units
Direct materials 103,500 124,200
Direct labor 282,500 339,000
Manufacturing overhead 667,000 679,800
Reference: 5-10
1. The best estimate of the total variable manufacturing cost per unit is:
90.00
20.70
77.20
12.80
2. The best estimate of the total cost to manufacture 5,300 units is closest to:
1,116,180
1,080,000
1,009,650
1,062,915
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Solution Summary
The solution explains the use of high low method to calculate the variable manufacturing cost and the total cost.
Solution Preview
1. We use the high low method to find the variable cost.
The change in manufacturing overhead is 12,800 and the change in volume is 1,000. Using the high low ...
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