Question

The accounting records for Portland Products report the following manufacturing costs for the past year. Direct materials Direct labor Variable overhead $ 380,000 262,000 230,000 Production was 170,000 units. Fixed manufacturing overhead was $810,000. 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 136,000 units of product this year. b. Determine the costs per unit for last year and for this year. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a cost estimate for a volume level of 136,000 units of product this year. (Do not round intermediate calculations.) T his Year's Cost Cost Item Direct materials Direct labor Variable overhead Fixed overhead Total costs $ 0 < Required A Required B

Answer 1

Solutions:

1.

Production (units)	1360000
	Per Unit	Total
Direct Materials	2.235294	3040000
Direct Labor	1.541176	2096000
Variable Overhead	1.352941	1840000
Fixed Overhead		810000
Total Costs		7786000

2.

	Per Unit
	Last Year	This Year
		% Increase
Direct Materials	2.235294	20%	2.682353
Direct Labor	1.541176	4%	1.602824
Variable Overhead	1.352941	-	1.352941
Fixed Overhead	4.764706	10%	5.241176
Cost Per Unit	9.894118		10.87929

Calculations to support the answer

Portland Products
Production (units)	170000
	Per Unit (Total/Units)	Total
Direct Materials	2.235294	380000
Direct Labor	1.541176	262000
Variable Overhead	1.352941	230000
Fixed Overhead	4.764706	810000
Total Costs		1682000