Lurvey, Inc., 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	$320,000
Direct manufacturing labor	All variable	240,000
Power	All variable	40,000
Supervision labor	20% variable	68,000
Materials-handling labor	40% variable	60,000
Maintenance labor	45% variable	80,000
Depreciation	0% variable	88,000
Rent, property taxes, and administration	0% variable	125,000

Lurvey, Inc., produced 80,000 units of product in 2014. Lurvey'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 88% compared with 2014.

b.

Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 44% in 2015 compared with 2014.

c.

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

d.

Depreciation costs are expected to increase by 99%, and rent, property taxes, and administration costs are expected to increase by 77%.

e.

Lurvey expects to manufacture and sell 90,000 units in 2015.

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 Lurvey's total manufacturing cost per unit in 2014, and estimate total manufacturing cost per unit in 2015.
3.	How can you obtain better estimates of fixed and variable costs? Why would these better estimates be useful to Lurvey?