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

Question:

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

Direct materials . . . . . . . . . . . . . . . . . . . . . $315,000

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . 262,500

Variable overhead . . . . . . . . . . . . . . . . . . . 231,000

Production was 150,000 units. Fixed manufacturing overhead was $270,000.

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 120,000 units of product this year.

b. Determine the costs per unit for last year and for this year.

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Related Book For  book-img-for-question

Fundamentals of Cost Accounting

ISBN: 978-1259565403

5th edition

Authors: William Lanen, Shannon Anderson, Michael Maher

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