The Dorilane 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 4,200 sets per year. Annual cost data at full capacity follow:

Direct labor$87,000

Advertising$99,000

Factory supervision$71,000

Property taxes, factory building$21,000

Sales commissions$56,000

Insurance, factory$8,000

Depreciation, administrative office equipment$2,000

Lease cost, factory equipment$16,000

Indirect materials, factory$21,000

Depreciation, factory building$101,000

Administrative office supplies (billing)$4,000

Administrative office salaries$111,000

Direct materials used (wood, bolts, etc.)$428,000

Utilities, factory$44,000

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.)(If your answer is zero, leave the cell blank.)

Cost Behavior Period(Selling or Administrative) Product Cost

Variable Fixed Cost Direct Indirect

Direct labor

Advertising

Factory supervisior

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

2. Compute the average product cost of one patio set.(Round your answer to nearest whole dollar.)

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?