5-30 Methods of Estimating Costs: Account Analysis (LO 5-3)

The accounting records for Portland Products report the following manufacturing costs for the past year:

Direct materials	$315,000
Direct labor	$262,500
Variable overhead	$231,000

Production was 150,000 units. Fixed manufacturing overhead was $270,000.

For the coming year, costs are expected to increase as follows: direct materials costs by 20%, excluding any effect of volume changes; direct labor by 4%; and fixed manufacturing overhead by 10%. Variable manufacturing overhead per unit is expected to remain the same.

Required

Prepare a cost estimate for a volume level of 120,000 units of product this year. Determine the costs per unit for last year and for this year.