=+3-22 KK Account analysis method OBJECTIVES 1, 3 Bower Ltd, which manufactures recycled plastic products, reports the following manufacturing costs and account analysis classification for the year ended 31 December 2014.

Account Classification Amount Direct materials All variable $300 000 Direct manufacturing labour All variable 225 000 Power All variable 37 500 Supervision labour 20% variable 56 250 Materials-handling labour 50% variable 60 000 Maintenance labour 40% variable 75 000 Depreciation 0% variable 95 000 Rent, property taxes and administration 0% variable 100 000 Bower Ltd produced 75000 units of product in 2014. Bower Ltd’s management is estimating costs for 2015 on the basis of 2014 numbers. The following additional information is available for 2015:

a Direct materials prices in 2015 are expected to increase by 5% compared with 2014.