The accounting records for Portland Products report the following manufacturing costs for the past year. Direct materials $ 370,000
Direct labor 266,000
Variable overhead 239,000
Production was 190,000 units. Fixed manufacturing overhead was $757,000. 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 152,000 units of product this year.
b. Determine the costs per unit for last year and for this year.
Calculate Cost estimate
Direct material (370000/190000*1.2)*152000 | 355200 |
Direct labor (266000/190000*1.04)*152000 | 221312 |
Fixed overhead (757000*1.1) | 832700 |
Variable overhead (239000/190000*152000) | 191200 |
Total Cost | 1600412 |
b) Cost per unit
Last year | This year | |
Cost per unit | 1632000/190000 = 8.59 | 1600412/152000 = 10.53 |
The accounting records for Portland Products report the following manufacturing costs for the past year. ...
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