The accounting records for Frankie's Fixtures report the following production costs for the past year:
Direct materials . . . . . . . . . . . . . . . . . . . . . $420,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . 350,000
Variable overhead . . . . . . . . . . . . . . . . . . . 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 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.