Assg2Q3

3 The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and four chairs. The company is currently operating at 80% of its full capacity of 2,900 sets per quarter. Quarterly cost data at this level of operations follow. 8 02-2105 $122,500 50,989 40,900 4,460 84,500 3,469 Factory labour, direct Advertising Factory supervision Property taxes, factory building Sales Commissions Insurance, factory Depreciation, office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building General office supplies (billing) General office salaries Direct materials used (wood, bolts, etc.) Utilities, factory 4,989 eBook 12,900 6,988 19,900 3,902 64,500 98,500 20,980 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. As examples, this has been done already for the first two Items in the preceding list Note that each cost item is classified in two ways: first, as varlable or fixed, with respect to the number of units produced and sold, and, second, as a selling and administrative cost or a product cost. (If the item is a product cost. It should also be classified as elther direct or Indirect as shown.) Cost Behaviour Selling and Administrative Cost Fixed Variable $ 122,500 Product Cost Direct Indirect* S 122,500 50.900 50,900 Cost Item Factory labour, direct Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building General office supplies (billing) General office salaries Direct materials used (wood, bolts, etc.) Utilities, factory Total costs S 122,500 5 50.000 s 50.900 s 122,500 S01 3 2 Based on the answers obtained in Requirement (1), compute the average product cost per patio set. (Round your answer to 2 decimal places.) 02:19:55 Average product cost per patio set cBook 3. Assume that production Increases to only 2610 sets quarterly. Would you expect the average product cost per patio set to Increase. decrease, or remain unchanged? Increase O Decrease O Remain unchanged 4. Refer to the original data. The president's brother-in-law has considered making a patio set and has priced the necessary materials at a building supply store. He has asked the president if he could purchase a patio set from the Mahela Company "at cost," and the president has agreed to let him do so. a. Would you expect any disagreement over the price the brother-in-law should pay? What price does the president probably have in mind? (Round your answer to 2 decimal places.) the president may expect a minimum price of