Question
The accounting records for Portland Products report the following manufacturing costs for the past year. Direct materials $ 320,000 Direct labor 267,000 Variable overhead 237,000
The accounting records for Portland Products report the following manufacturing costs for the past year.
Direct materials $ 320,000
Direct labor 267,000
Variable overhead 237,000
Production was 140,000 units. Fixed manufacturing overhead was $774,000. 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 112,000 units of product this year.
b. Determine the costs per unit for last year and for this year.
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