Given the following information:

Deluxe Homes is a residential Home Builder. Based on their current production of 300 homes per year, their costs per unit are:

(in $000)

Direct labour $ 20

Direct materials 200

Variable overhead 30

Fixed overhead 40

Variable selling costs 10

Fixed selling costs 10

Total cost per unit $310

Required (Each of these are separate situations):

1. What is the cost per unit if production is increased to 400 homes per year, and there is an increase of $3.50 million in total fixed costs?

2. What is the cost per unit if production is decreased to 270 homes per year, and there is a decrease of $2.04 million in total fixed costs?