The accounting records of a company report the following manufacturing costs for the past year:

Production was 70,000 units. Fixed manufacturing overhead was $240,000.
For the coming year, the direct materials costs are expected to increase by 20 percent, excluding any effects of volume changes. Direct labor rates are scheduled to increase by 4 percent. Fixed manufacturing overhead is expected to increase 7.5 percent, and variable manufacturing overhead per unit is expected to remain the same.

a. Prepare a cost estimate for an activity level of 80,000 units of product this year.

b. Determine the costs per unit for last year and for this year.

Transcribed Image Text:

Direct materials . $210,000 Direct labor.. 175,000 Manufacturing overhead.. 394,000