Riley Company Would Like to Estimate Production Costs on an Annual

Essay

Riley Company would like to estimate production costs on an annual basis.Costs incurred for direct materials and direct labor are variable costs.The accounting records indicate the following production costs were incurred last year for 40,000 units:
$$\begin{array} { l r } \text { Direct materials } & \$ 60,000 \\\text { Direct labor } & 80,000 \\\text { Marufacturing overhead } & 200,000& \text { (20\% fixed; 80\% variable) }\end{array}$$
Use account analysis to estimate the fixed costs per year,and the variable cost per unit.