5-30 Methods of Estimating Costs: Account Analysis (LO 5-3) The accounting records for Portland Products...
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5-30 Methods of Estimating Costs: Account Analysis (LO 5-3)
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%, excluding any effect of volume changes; direct labor by 4%; and fixed manufacturing overhead by 10%. Variable manufacturing overhead per unit is expected to remain the same.
Required
Prepare a cost estimate for a volume level of 120,000 units of product this year. Determine the costs per unit for last year and for this year.
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