Question

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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 4,100 sets per year. Annual cost data at full capacity follow: $ $ 23 points $ $ (8 02:55:09 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 $ $ $ $ $ $ $ $ $ 93,000 99,000 73,000 20,000 56,000 6,000 2,000 18,000 20,000 101,000 4,000 105,000 426,000 48,000 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.) Period (Selling Cost Behavior or Product Cost Administrative) Cost Variable Fixed Direct Indirect Cost Item 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

Answer 1

1
	Cost behavior		Selling or administrative	Product cost
	Variable	Fixed	Cost	Direct	Indirect
Direct labor	93000			93000
Advertising		99000	99000
Factory supervision		73000			73000
Property taxes, factory building		20000			20000
Sales commissions	56000		56000
Insurance, factory		6000			6000
Depreciation, administrative office equipment		2000	2000
Lease cost, factory equipment		18000			18000
Indirect materials, factory	20000				20000
Depreciation, factory building		101000			101000
Administrative office supplies (billing)	4000		4000
Administrative office salaries		105000	105000
Direct materials used (wood, bolts, etc.)	426000			426000
Utilities, factory	48000				48000
Total costs	647000	424000	266000	519000	286000