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The accounting records for Portland Products report the following manufacturing costs for the past year: Direct...

The accounting records for Portland Products report the following manufacturing costs for the past year: Direct materials $ 360,000 Direct labor 268,000 Variable overhead 233,000 Production was 180,000 units. Fixed manufacturing overhead was $843,000. 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 144,000 units of product this year. (Do not round intermediate computations.) b. Determine the costs per unit for last year and for this year. (Round your answers to 2 decimal places.)

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Working note

Statement of Cost

180000 Units

Per Unit (Cost/180000)

Direct material

$      360,000.00

$               2.00*

Direct Labor

$      268,000.00

$               1.49

Variable Overheads

$      233,000.00

$               1.29

Total variable Cost

$      861,000.00

$               4.78

Fixed cost

$      843,000.00

Total Cost

$ 1,704,000.00

*360000/180000

Change in Cost

Current

Change

Changed Cost

Direct material (per Unit)

$   2.00

(2+20%)

$   2.40

Direct Labor (Per unit)

$   1.49

(1.49+4%)

$ 1.55

Fixed manufacturing overheads (Total)

$                   843,000.00

(843000+10%)

$ 927,300.00

Cost Estimate

144000 Units

Working

Direct material

$     345,600.00

144000*2.4

Direct Labor

$     223,142.40

144000*1.55

Variable Overheads

$     186,400.00

$233000/180000x144000

Total variable Cost

$     755,142.40

Fixed cost

$     927,300.00

843000+10%

Total Cost

$ 1,682,442.40

Cost per Unit

Last year

This Year

(A)

Total Cost

$ 1,704,000.00

$ 1,682,442.40

(B)

Total Units

180000

144000

(A/B)

Cost per Unit

$ 9.47

$ 11.68

ekkarill92 answered 1 year ago
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