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.
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.