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Problem 1-18 (Algo) Direct and Indirect Costs; Variable Costs [LO1-1, LO1-4] The following cost data pertain to the operations of Montgomery Department Stores, Inc., for
Problem 1-18 (Algo) Direct and Indirect Costs; Variable Costs [LO1-1, LO1-4] The following cost data pertain to the operations of Montgomery Department Stores, Inc., for the month of July. Corporate legal office salaries $ 78,660 Apparel Department cost of salesEvendale Store $ 169,560 Corporate headquarters building lease $ 58,260 Store manager's salaryEvendale Store $ 18,660 Apparel Department sales commissionEvendale Store $ 16,760 Store utilitiesEvendale Store $ 16,160 Apparel Department manager's salaryEvendale Store $ 8,150 Central warehouse lease cost $ 26,460 Janitorial costsEvendale Store $ 13,660 The Evendale Store isjust one of many stores owned and operated by the company. The Apparel Department is one of many departments at the Evendale Store. The central warehouse serves all of the company's stores. Required: 1. What is the total amount of the costs listed above that are direct costs of the Apparel Department? 2. What is the total amount of the costs listed above that are direct costs of the Evendale Store? 3. What is the total amount of the Apparel Department's direct costs that are also variable costs with respect to total departmental sales? Total direct costs for the Apparel Department 2. Total direct costs for the Evendale Store 3. Total direct costs for the Apparel Department that are also variable costs Case 1-26 (Algo) Cost Classification and Cost Behavior [LO1-1, L01-2, LO1-3, LO1-4] The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand tojustify producing its full capacity of 4,000 sets per year. Annual cost data at full capacity follow: Direct labor $ 93,099 Advertising $ 104,099 Factory supervision $ 65,999 Property taxes, factory building $ 19,099 Sales commissions $ 58,099 Insurance, factory $ 6,099 Depreciation, administrative office equipment $ 3,099 Lease cost, factory equipment $ 19,099 Indirect materials, factory $ 18,999 Depreciation, factory building $ 199,099 Administrative office supplies (billing) $ 4,099 Administrative office salaries $ 113,999 Direct materials used (wood, bolts, etc.) $ 428,099 Utilities, factory $ 41,099 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: rst, as variable 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 either direct or indirect.) 2. Compute the average product cost of one patio set. 3. Assume that production drops to only 1,000 sets annually. Would you expect the average product cost per set to increase, decrease, or remain unchanged? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the average product cost of one patio set. (Round your final answer to nearest whole dollar.) per set Exercise 2-4 (Algo) Computing and Using the CM Ratio [L02-3] Last month when Holiday Creations, Inc., sold 38,000 units, total sales were $298,000, total variable expenses were $232,440, and fixed expenses were $38,400. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase total sales by $1,200? (Do not round intermediate calculations.) 1. Contribution margin ratio % 2. Estimated change in net operating income
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