Gower Ltd., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 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

Gower Ltd, produced 75,000 units of product in 2014. Gowers 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.

b. Under the terms of the contract, direct manufacturing labour wage rates are expected to increase by 10% in 2015 compared with 2014.

c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2014 to 2015.

d. Depreciation costs are expected to increase by 5%, and rent, property taxes, and administration costs are expected to increase by 7%.

e. Gower, Inc., expects to manufacture and sell 80,000 units in 2015. Required:

1. Prepare a schedule of variable, fixed, and total manufacturing costs for each account category in 2015. Estimate total manufacturing costs for 2015.

2. Calculate Gowers total manufacturing cost per unit in 2014, and estimate total manufacturing cost per unit in 2015.

3. How can you get better estimates of fixed and variable costs? Why would these better estimates be useful to Gower?