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Paragon Company would like to estimate production costs on an annual basis. Costs incurred for direct materials and direct labor are variable costs. The accounting records indicate that the following production costs were incurred last year for 25,000 units.
Direct materials $100,000
Direct labor $215,000
Manufacturing overhead $300,000 (20 percent fixed; 80 percent variable)
Required:
Problem 1: Use account analysis to estimate the fixed costs per year, and the variable cost per unit.
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