Cost Behavior Project
zc2320866122
Project2.docxAccounting 347
Cost Behavior Project - Second Project
Winter 2019
Bush incorporated, a manufacturing company reports the following actual costs for the year ended December 31, 2018.
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Account |
Classification |
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|
Cost
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Direct materials Direct manufacturing labor Power Supervision labor Materials-handling labor Maintenance labor Depreciation Rent, property taxes, admin |
All Variable All Variable All Variable 20% Variable 50% Variable 40% Variable All Fixed All Fixed
|
|
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$300,000 225,000 37,500 56,250 60,000 75,000 95,000 100,000 |
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The company produced 75,000 units in 2018 and the management is estimating the costs for 2019 using the information from 2018. The following additional information is available for 2019.
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1. Direct materials prices in 2019 are expected to increase by 5% compared with 2018.
1. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 10% in 2019 compared with 2018.
1. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change.
1. Depreciation costs, rent, property taxes, and administration costs are expected to increase by 10%.
1. The company expects to manufacture and sell 80,000 units in 2019.
Requirements:
1. Prepare a schedule of variable and fixed cost for each of the costs and total manufacturing cost for 2018 and 2019.
1. Calculate the company’s per unit cost for 2018 and 2019.
