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 of2,000sets per year. Annual cost data at full capacity follow:

Direct labor . . $118,000 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 . . . . . $20,000Selling or Cost Behavior Administrative Product Cost Cost Item Variable Fixed Cost Direct Indirect Direct labor $118,000 $118,000 Advertising $50,000 $50,000 Factory supervision 40,000 $40,000 Property taxes, factory building 3,500 3,500 Sales commissions 80,000 80,000 Insurance, factory 2,500 2,500 Depreciation, administrative office equipment 4,000 4,000 Lease cost, factory equipment 12,000 12,000 Indirect materials, factory 6,000 6,000 Depreciation, factory building 10.000 10,000 Administrative office supplies 3,000 3,000 Administrative office salaries 60,000 60,000 Direct materials used 94,000 94,000 Utilities, factory 20.000 20.000 Total costs $321.000 $182.000 $197.000 $212.000 $94.000Total at 2,000 Units Per Unit Sales Variable Costs Contribution Margin Fixed Costs Operating Income