Answer:
Results are below.
Explanation:
<u>First, we need to calculate the unitary costs:</u>
Direct materials= 390,000/180,000= $2.17
Direct labor= 261,000/180,000= $1.45
Variable overhead= 235,000/180,000= $1.31
<u>Now, we determine the new costs:</u>
Direct materials= 2.17*1.2= $2.604
Direct labor= 1.45*1.04= $1.508
Fixed overhead= 851,000*1.1= $936,100
<u>Total cost for 144,000 units:</u>
Total cost= 144,000*(2,604 + 1,508 + 1.31) + 936,100
Total cost= 144,000*5.422 + 936,100
Total cost= $1,716,868
<u>Finally, the unitary cos for both years:</u>
Last year= 2.17 + 1.45 + 1.31= $4.93
This year= $5.422
