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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993 Exercise 8
Methods of Estimating Costs: Account Analysis
The accounting records for FarOut Cards report the following production costs for the past year:
Production was 210,000 units. Fixed manufacturing overhead was $720,000.
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 220,000 units of product this year.
b. Determine the costs per unit for last year and for this year.
The accounting records for FarOut Cards report the following production costs for the past year:
Production was 210,000 units. Fixed manufacturing overhead was $720,000.
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 220,000 units of product this year.
b. Determine the costs per unit for last year and for this year.
Explanation
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(a)The costs are estimated based on leve...
Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
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