Exercise 5-27 Methods of Estimating Costs: Account Analysis (LO 5-3)

The accounting records for Frankies Fixtures report the following production costs for the past year:

Direct Materials	$	651,000
Direct Labor		585,000
Variable Overhead		470,000

Production was 256,000 units. Fixed manufacturing overhead was $837,000.

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

Required:

(a)	Prepare a cost estimate for a volume level of 266,000 units of product this year. (Do not round your intermediate computations. Round your final answers to nearest whole dollar amount.)

(b)	Determine the costs per unit for last year and for this year. (Round your answers to 2 decimal places.)