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: Factory labor, direct 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 $88,000 $101,000 $68,000 $ 16,000 $64,000 $7,000 $3,000 $12,000 $17,000 $108,000 $5,000 $105,000 $427,000 $43,000 Requirement 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 as shown.) (Leave no cells blank - be certain to enter"0" wherever required. Omit the "S" sign in your response.) Cost behavior Variable Fixed Selling or Administrative Cost Product Cost Direct Indirect Cost item Factory labor, direct 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 Administrative office salaries Direct materials used Utilities, factory Total costs Requirement 2: Compute the average product cost of one patio set. (Round your answer to the nearest dollar amount. Omit the "S".sign in your response.) Average product cost per patio set Requirement 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? (Click to select) Requirement 4: Refer to the original data. The president's brother-in-law has considered making himself a patio set and has priced the necessary materials at a building supply store. The brother-in-law has asked the president if he could purchase a patio set from the Dorilane Company "at cost," and the president agreed to let him do so. (a) Would you expect any disagreement between the president and brother-in-law over the price? (Click to select) (b) Because the company is operating at full capacity, what cost term used in the chapter might be justification for the president to charge the full, regular price to the brother-in-law and still be selling "at cost"? (Click to select) Swift Company was organized on March 1 of the current year. After five months of start-up losses, management had expected to earn a profit during August. Management was disappointed, however, when the income statement for August also showed a loss. August's income statement follows: $596,000 Swift Company Income Statement For the Month Ended August 31 Sales Less operating expenses: $88,000 Raw materials purchased 190,300 Manufacturing overhead 210,925 Selling and administrative expenses 142,775 Net operating loss Direct labor cost 300 632,000 $(36,000) After seeing the $36,000 loss for August, Swift's president stated, "I was sure we'd be profitable within six months, but our six months are up and this loss for August is even worse than July's. I think it's time to start looking for someone to buy out the company's assets-if we don't, within a few months there won't be any assets to sell. By the way, I don't see any reason to look for a new controller. We'll just for the time being." The company's controller resigned a month ago. Sam, a new assistant in the controller's office, prepared the income statement above. Sam has had little experience in manufacturing operations. Inventory balances at the beginning and end of the month were as follows: August 1 $17,000 $72,000 $19,000 Raw materials Work in process Finished goods August 31 $43,000 $84,000 $61,000 SE The president has asked you to check over the income statement and make a recommendation as to whether the company should look for a buyer for its assets. Requirement 1: As one step in gathering data for a recommendation to the president, prepare manufactured for August. (Omit the "S" sign in your response.) schedule of cost of goods 3 ES Swift Company Schedule of Cost of Goods Manufactured SC For the Month Ended August Direct materials: (Click to select) (Click to select) : (Click to select) (Click to select) (Click to select) : (Click to select) Raw materials used in production (Click to select) (Click to select) Total manufacturing costs (Click to select) : (Click to select) (Click to select) : (Click to select) Cost of goods manufactured S Requirement 2: As a second step, prepare a new income statement for August. (Omit the "$" sign in your response.) Swift Company Income Statement For the Month Ended August : (Click to select) (Click to select) Cost of goods sold: (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) : (Click to select) Requirement 3: Based on your statements prepared in requirement (1) and (2) above, would you recommend that the company continue operations? (Click to select)