B). Calculation of cost per unit of last year and this
year.
Last year :
Direct materials = $340,000 / 170,000 units = $2 per unit
Direct labor = $268,000 / 170,000 units = $1.5765 per unit rounded
off.
Variable overhead = $237,000 / 170,000 = $1.3941 per unit rounded
off.
Fixed manufacturing cost = $813,000 / 170,000 units = $4.78 per unit rounded off.
This Year:
Direct materials ($2 * 120%) = $2.4 per unit
Direct labor ($1.5765 * 104%) = $1.63956 per unit
Variable overhead = $1.3941 per unit rounded off.
Fixed manufacturing cost =( $813,000 * 110%) = $894,300
a). Cost estimate for this year:
Direct Material ($2.4 * 136,000 units) = $326,400
Direct labor ($1.63956 * 136,000 units) = $222,980.16
Variable overhead ($1.3941 * 136,000 units) = $189,597.60
Fixed overhead = $894,300
Totol cost = $1,633,277.76
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