a.

b.

c.

The Outdoor Dining Company specializes in producing a set of wood patio furniture consisting of a table and four chairs. The set enjoys great popularity, and the company has ample orders to keep production going at its full capacity of 1,200 sets per year, Annual cost data at full capacity follow: Direct labour Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory Administrative office supplies Direct materials used (wood, bolts, etc.) Utilities, factory $130, 100 $ 41,100 $ 49,400 $3,400 $ 59,200 $ 2,780 $ 3,900 $ 18,900 $ 4,900 $ 15,900 $ 2,200 $ 63,800 $ 22,200 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, as either variable or fixed with respect to the number of units produced and sold, and second, as either a selling and administrative cost or a product cost. (If the item is a product cost, it should also be classified as either direct or indirect) Cost Behavior Variable Fixed Selling and Administrative Cost Product Cost Direct Indirect Cost Item Direct labour Advertising Factory supervision Property taxes, factory building Sales commissions Insurance factory Depreciation, administrative office equipment Loose cost, factory equipment Indirect materials factory Depreciation factory Administrative office supplies Direct materials used (wood, toits, etc) Uuties, factory Total costs 2. Compute the average product cost per patio set. (Round your answer to 2 decimal places.) Average product cost per patio set 3. Due to reduced demand assume that production drops to only 1000 sets per year. Would you expect the average product cost per patio set to increase. decrease, or remain unchanged? Increase Decrease Remain unchanged