The Outdoor Dining 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 1,400 sets per year. Annual cost data at full capacity follow:

Direct labour	$	129,500
Advertising	$	36,700
Factory supervision	$	45,700
Property taxes, factory building	$	4,000
Sales commissions	$	53,900
Insurance, factory	$	2,700
Depreciation, administrative office equipment	$	4,000
Lease cost, factory equipment	$	15,300
Indirect materials, factory	$	4,700
Depreciation, factory	$	12,800
Administrative office supplies	$	2,500
Direct materials used (wood, bolts, etc.)	$	53,100
Utilities, factory	$	23,600

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 either variable or fixed with respect to the number of units produced and sold, and second, as either 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 perpatio set. (Round your answer to 2 decimal places.)

3. Due to reduced demand, assume that production drops to only 1,000 sets per year. Would you expect the average product cost per patio set to increase, decrease, or remain unchanged?

multiple choice

Increase

Decrease

Remain unchanged