The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and four chairs. The company has ample orders to keep production going at its full capacity of 2,600 sets per quarter. Quarterly cost data at full capacity follow:

Factory labour, direct	$	121,000
Advertising		50,600
Factory supervision		40,600
Property taxes, factory building		4,100
Sales commissions		83,000
Insurance, factory		3,100
Depreciation, office equipment		4,600
Lease cost, factory equipment		12,600
Indirect materials, factory		6,600
Depreciation, factory building		10,600
General office supplies (billing)		3,600
General office salaries		63,000
Direct materials used (wood, bolts, etc.)		97,000
Utilities, factory		20,600

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.)

2.	Compute the average product cost per patio set. (Round your answer to 2 decimal places.)

3.

Assume that production drops to only 1,000 sets quarterly. Would you expect the average product cost per patio set to increase, decrease, or remain unchanged?

	Increase
	Decrease
	Remain unchanged

4.	Refer to the original data. The presidents 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.)