this is also included in the question
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: 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 $122,500 50,900 40,900 4,400 84,500 3,400 4,900 12,900 6,900 10,900 3,900 64,500 98,500 20,900 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 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 as shown) Cost Behaviour Variable Fixed $ 122.500 Selling and Administrative Cost Cost Item Factory labour direct Product Cost Direct Indirect 122.500 5 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 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 as shown.) Cost Behaviour Selling and Administrative Variable Fixed Cost $ 122,500 50,900 50,900 Product Cost Direct Indirect 122,500 $ 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 "To units of product 2. Based on the answers obtained in Requirement (1), compute the average product cost per patio set. (Round your answer to 2 decimal places.) Average product cost per patio set 3. Assume that production increases to only 2,610 sets quarterly. Would you expect the average product cost per patio set to increase, decrease, or remain unchanged? O Increase Decrease 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 o RE search 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 9 b. Since the company is operating below its full capacity, what cost term used in the chapter might be the most applicable in this situation? O Opportunity cost Sunk cost O Relevant cost
