(Answered) Question - the following manufacturing costs were incurred

Accounting

Question - The following manufacturing costs were incurred by the Miracle Mile Company in 2015:

Direct materials	$225,000
Direct labor	350,000
Manufacturing overhead	470,000

These costs were incurred to produce 50,000 units of product. Variable manufacturing overhead was 70% of the direct materials cost.

In 2016, 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 2016.

b. Determine the total product costs per unit for 2015 and 2016.

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