Part lI Cost Analysis and Estimation The accounting records for Frankie\'s Fixtu

Question

Part lI Cost Analysis and Estimation The accounting records for Frankie's Fixtures report the following production costs for the past year 5-3) 5-27. Methods of Estimating Costs: Account Analysis Direct materials. 350,000 308,000 . . .. Production was 210,000 units. Fixed manufacturing overhead was $480,000. 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 manu- facturing 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 220,000 units of product this year. h Determine the costs per unit for last year and for this year 5-28. Methods of Estimating Costs: Account Analysis A consulting firm's accounting records show the following costs for year 1:

Explanation / Answer

Q5-27 a 210000 units 220000 units

direct material 420000 504000 {420000 + 84000}

direct labour 350000 364000 {350000 + 14000}

variable overhead 308000 308000

fixed overhead 480000 528000 {480000 + 48000}

total cost 1558000 1704000

cost per unit 1558000 / 210000 1704000 / 220000

= $7.42 $7.75

  

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