Records at Hals Accounting Services show the following costs for year 1.

Direct materials and supplies	$	43,000
Employee costs		2,900,000
Total overhead		1,260,000

Production was 35,000 billable hours. Fixed overhead was $710,000.

Assuming no change in billable hours in year 2, direct materials and supplies costs are expected to increase by 10 percent. Direct labor costs are expected to increase by 15 percent. Variable overhead per billable hour is expected to remain the same, but fixed overhead is expected to increase by 5 percent.

Required:

a. Year 2 production is expected to be 28,000 billable hours. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for year 2?

Cost Item	Year 2 Cost
Direct materials and supplies
Direct labor
Variable overhead
Fixed overhead
Total costs

b. Determine the total costs per billable hour for year 1 and year 2. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	Cost per Billable Hour
Year 1
Year 2