Baker Corporation Has Provided the Following Production and Average Cost

question 38

Multiple Choice

Baker Corporation has provided the following production and average cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total variable manufacturing cost per unit is:

• A)$89.50
• B)$18.40
• C)$71.10
• D)$30.90

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Definitions:

Direct Labor-Hours

The total hours of work directly contributed by laborers to produce goods or services.

Manufacturing Overhead

The indirect costs involved in making a product, excluding direct materials and direct labor expenses.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, computed in advance for each period.

Traditional Costing

An accounting method that allocates overhead costs to products based on a single, volume-based cost driver, such as direct labor hours.