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Exercise $2-52($Algo$)$ Cost Behavior and Forecasting $($LO $2-5)$

Otsego Industries manufactured $300,000$ units of product last year and identified the following costs associated with the manufacturing activity:

$($$$000)$

Variable costs:

Direct materials used $ $6,120\mathrm{.}0$

Direct labor $4,060\mathrm{.}0$

Indirect materials and supplies $1,420\mathrm{.}0$

Power to run plant equipment $1,300\mathrm{.}0$

Fixed costs:

Supervisory salaries $ $2,060\mathrm{.}0$

Plant utilities $($other than for plant equipment$)1,676\mathrm{.}7$

Depreciation on plant and equipment $2,085\mathrm{.}0$

Property taxes on building $1,318\mathrm{.}3$

Required:

Unit variable costs and total fixed costs are expected to remain unchanged in the following year. However, management expects a slowdown in sales, because of the economy in the following year. Calculate the unit cost and the total cost if $255,000$ units are produced next year