Case: The Dial 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 2,000 sets per year. Annual cost data at full capacity follow:

2.) Assume sales and demand for 2020 are 2,000 units, what would be the minimum price that you would charge if you wanted to make a profit. Why is this the correct price? Please explain your calculations and reference to the chart in Figure 1.

4. Assume sales and demand are 1,500 units, how much will the company make on the sale of the next unit (1,501st)? Discuss which costs will change if the company makes and sells one more unit. Will the company make a profit on the unit if they sell at a price below your answer in 2? Please discuss your calculations and reference to Figure 1.

Selling or Administrative Cost Cost Behavior Variable $113,000 Product Cod: Indirect Cost Item Fixed Direct $118,000 ............. Direct labor............. Advertising ........ $50,000 $30,000 Factory supervision 40,000 3,500 $40,000 3,500 Property taxes, factory building Sales commissions. 80,000 30,000 Insurance, factory 2,500 Depreciation, administrative office equipment..... 2,500 4,000 12,000 4,000 Lease cost, factory equipment 12,000 ..... 6,000 6,000 10,000 10,000 Indirect materials, factory.......... ...... Depreciation, factory building........ Administrative office supplies................... Administrative office salaries................ 3,000 3,000 60,000 60,000 94,000 94,000 Direct materials used....... .... Utilities, factory........ ... Total costs...... ... ..... 20,000 20,000 594.000 $321.000 $132.000 5197.000 5212,000 Selling or Administrative Cost Cost Behavior Variable $113,000 Product Cod: Indirect Cost Item Fixed Direct $118,000 ............. Direct labor............. Advertising ........ $50,000 $30,000 Factory supervision 40,000 3,500 $40,000 3,500 Property taxes, factory building Sales commissions. 80,000 30,000 Insurance, factory 2,500 Depreciation, administrative office equipment..... 2,500 4,000 12,000 4,000 Lease cost, factory equipment 12,000 ..... 6,000 6,000 10,000 10,000 Indirect materials, factory.......... ...... Depreciation, factory building........ Administrative office supplies................... Administrative office salaries................ 3,000 3,000 60,000 60,000 94,000 94,000 Direct materials used....... .... Utilities, factory........ ... Total costs...... ... ..... 20,000 20,000 594.000 $321.000 $132.000 5197.000 5212,000