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Hamwey, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2014.

Account	Classification	Amount
Direct materials	All variable	$271,250
Direct manufacturing labor	All variable	193,750
Power	All variable	19,375
Supervision labor	25% variable	31,000
Materials-handling labor	60% variable	62,000
Maintenance labor	50% variable	69,750
Depreciation	0% variable	95,000
Rent, property taxes, and administration	0% variable	115,000

Hamwey, Inc., produced 77,500 units of product in 2014. Hamwey's management is estimating costs for 2015 on the basis of 2014 numbers. The following additional information is available for 2015.

a.	Direct materials prices in 2015 are expected to increase by 88% compared with 2014.
b.	Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 12% in 2015 compared with 2014.
c.	Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2014 to 2015.
d.	Depreciation costs are expected to increase by 99%, and rent, property taxes, and administration costs are expected to increase by 88%.
e.	Hamwey expects to manufacture and sell 87,500 units in 2015. 1. Prepare a schedule of variable, fixed, and total manufacturing costs for each account category in 2015. Estimate total manufacturing costs for 2015. 2. Calculate Hamwey's total manufacturing cost per unit in 2014, and estimate total manufacturing cost per unit in 2015. 3. How can you obtain better estimates of fixed and variable costs? Why would these better estimates be useful to Hamwey?

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