Methods of Estimating Costs—Account Analysis: 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 10 percent. Fixed manufacturing overhead is expected to increase 7.5 percent, and variable manufacturing overhead per unit is expected to remain the same.

Required:

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 241,500 Manufacturing overhead 372,800