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:

The patio sets are normally sold for $400 per set. Dial can increase capacity by 1,000 units to 3,000 units but must pay $50,000 to do so. Annual cost data for the production of 2,000 sets are classified as follows:
		Cost Behavior		Selling or 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	$94,000

For the following questions, please use the information on pages 1 and 2 to help support your decisions. Please document your answer in a clear, concise way and reference any numbers that were used to make your decision. Each question is independent and refers to the original data unless specified otherwise. For each question, please use up to 100 words. Each question is worth 5 points for a total of 20 points.

1. Do total fixed costs change for a relevant range of zero to 2,000 units? Why or why not?

What is the variable cost per unit and what are the total variable costs for 2,000 units?

Please explain your calculations and reference to the chart in Figure 1.