Methods of Estimating Costs-Account Analysis: The accounting records of a company indicate the following manufacturing costs were incurred in Year 1:

These costs were incurred to produce 50,000 units of product. Fixed manufacturing overhead amounts to $475,000. For Year 2, direct materials costs are expected to increase by 10 percent per unit. Direct labor costs are due to increase by 15 percent per unit. Variable manufacturing costs are expected to remain constant per unit, while fixed manufacturing overhead for Year 2 is expected to increase by 5 percent.

Required:

a. Year 2 production is estimated to be 65,000 units. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for Year 2.

b. Determine the total manufacturing costs per unit for Year 1 and Year 2.

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Direct materials $575,000 Direct labor 479,000 Manufacturing overhead 726,000