Methods of Estimating Costs: Account Analysis A company’s accounting records show the following manufacturing costs for year 1:

Production was 100,000 units. Fixed manufacturing overhead was $475,000.

For year 2, direct materials costs are expected to increase by 10 percent per unit. Direct labor costs are expected to increase by 15 percent. Variable manufacturing overhead per unit is expected to remain the same, but fixed manufacturing overhead is expected to increase by 5 percent.
Required

a. Year 2 production is expected to be 130,000 units. What are the estimated direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead costs for year 2?

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

Transcribed Image Text:

Direct materials $615,000 Direct labor 479,000 Manufacturing overhead 760,000