The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 4,100 sets per year. Annual cost data at full capacity follow:
| Direct labor | $ 85,000 |
| Advertising | $ 104,000 |
| Factory supervision | $ 71,000 |
| Property taxes, factory building | $ 22,000 |
| Sales commissions | $ 60,000 |
| Insurance, factory | $ 6,000 |
| Depreciation, administrative office equipment | $ 2,000 |
| Lease cost, factory equipment | $ 18,000 |
| Indirect materials, factory | $ 20,000 |
| Depreciation, factory building | $ 107,000 |
| Administrative office supplies (billing) | $ 4,000 |
| Administrative office salaries | $ 107,000 |
| Direct materials used (wood, bolts, etc.) | $ 426,000 |
| Utilities, factory | $ 45,000 |
Required:
1. Enter the dollar amount of each cost item under the appropriate headings. 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.)
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?
The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 4,100 sets per year. Annual cost data at full capacity follow: Direct labor Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building Administrative office supplies (billing) Administrative office salaries Direct materials used (wood, bolts, etc.) Utilities, factory $ 85,000 $ 104,000 $ 71,000 $ 22,000 $ 60,000 $ 6,000 $ 2,000 $ 18,000 $ 20,000 $ 107,000 $ 4,000 $ 107,000 $ 426,000 $ 45,000 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. 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.) 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 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? Increase Decrease Remain unchanged The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 4,100 sets per year. Annual cost data at full capacity follow: Direct labor Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building Administrative office supplies (billing) Administrative office salaries Direct materials used (wood, bolts, etc.) Utilities, factory $ 85,000 $ 104,000 $ 71,000 $ 22,000 $ 60,000 $ 6,000 $ 2,000 $ 18,000 $ 20,000 $ 107,000 $ 4,000 $ 107,000 $ 426,000 $ 45,000 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. 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.) 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.) Average product cost per set decrease, or remain unchanged? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Enter the dollar amount of each cost item under the appropriate headings. 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.) Cost Behavior Product Cost Cost Item Period (Selling or Administrative) Cost Variable Fixed Direct Indirect Direct labor Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building Administrative office supplies (billing) Administrative office salaries Direct materials used (wood, bolts, etc.) Utilities, factory Total costs
