Methods of Estimating Costs: Account Analysis
The accounting records for Miller Fixtures report the following production costs for the past year:
|
Direct materials |
$210,000 |
|
Direct labor |
175,000 |
|
Variable overhead |
154,000 |
Production was 210,000 units. Fixed manufacturing overhead was $240,000.
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 220,000 units of product this year.
b. Determine the costs per unit for last year and for this year.