Various cost and sales data for Meredith Company for the just completed year follow:

Finished goods inventory, beginning $ 20,000

Finished goods inventory, ending 40,000

Depreciation, factory 27,000

Administrative expenses 110,000

Utilities, factory 8,000

Maintenance, factory 40,000

Supplies, factory 11,000

Insurance, factory 4,000

Purchases of raw materials 95,000

Raw materials inventory, beginning 9,000

Raw materials inventory, ending 6,000

Direct labor 70,000

Indirect labor 15,000

Work in process inventory, beginning 7,000

Work in process inventory, ending 30,000

Sales 500,000

Selling expenses 85,000

Prepare a schedule of cost of goods manufactured

Prepare an income statement. (Ignore income taxes).

Assume that the company produced the equivalent of 10,000 units of product during the year just completed. What was the unit cost for direct labor? What was the unit cost for factory depreciation?

Assume that the company expects to produce 15,000 units of product during the coming year. What per unit cost and what total cost would you expect the company to incur for direct labor at this level of activity? For factory depreciation? (In preparing your answer, assume that depreciation is computed on a straight-line basis).

As the manager for production costs, explain to the president any difference in unit costs between (c) and (d) above.