The Following Manufacturing Costs Were Incurred by the Miracle Mile

The following manufacturing costs were incurred by the Miracle Mile Company in 2019:
$$\begin{array} { l r } \text { Direct materials } & \$ 225,000 \\\text { Direct labor } & 350,000 \\\text { Manufacturing overhead } & 470,000\end{array}$$
These costs were incurred to produce 50,000 units of product. Variable manufacturing overhead was 70% of the direct materials cost.
In 2020, the direct material and variable overhead costs per unit will increase by 12%, but the direct labor costs per unit are not expected to change. Fixed manufacturing costs are expected to increase by 8%.
Required:
(a.) Prepare a cost estimate for an activity level of 40,000 units of product in 2020.
(b.) Determine the total product costs per unit for 2019 and 2020.

Correct Answer:

Verified

(a.)
Variable overhead costs (2019) = 0....

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