1. Fahmy furniture produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 2,000 sets per year. Annual cost data at full capacity follow:

$

Direct Labor

1118,000

Advertising

50,000

Factory supervision

40,000

Property taxes, factory building

3,500

Sales commissions

80,000

Insurance, factory

2,500

Depreciation, administrative office equipment

4,000

Lease cost, factory equipment

12,000

Indirect materials, factory

6,000

Depreciation, factory building

10,000

Administrative office supplies (billing)

3,000

Administrative office salaries

60,000

Direct materials used (wood, bolts etc)

94,000

Utilities (factory)

20,000

a. Prepare an answer sheet with the column headings shown below:

COST ITEM

COST BEHAVIOR

Period Costs

$

Product Cost

Variable

$

Fixed

$

Direct

$

Indirect

$

b. Total the $ in each of the columns in (a) above. Compute the product cost of one patio set.