Bakker 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 8,500 units 9,500 units Direct materials $97.70 per unit $97.70 per unit Direct labor $27.60 per unit $27.60 per unit Manufacturing overhead $72.30 per unit $68.30 per unitThe best estimate of the total variable manufacturing cost per unit is:$172.70$159.60$125.30$166.00

The correct answer is B.

Explanation:

Giving the following information:

The company produces a single product.

Production volume 8,500 units 9,500 units

Direct materials $97.70 per unit

Direct labor $27.60

Manufacturing overhead $72.30 per unit $68.30 per unit.

Variable Manufacturing cost = direct material + direct labor + variable manufacturing overhead

Variable Manufacturing overhead:

We need to use the high low method:

Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units)

Variable cost per unit = (648,850 - 614,550) / (9,500 - 8,500) = 34.3

Variable Manufacturing cost = 97.7 + 27.6 + 34.3 = $159.6