Question

The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and four chairs. The company is currently operating at 80% of its full capacity of 3,800 sets per quarter. Quarterly cost data at this level of operations follow. Factory labour, direct Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building General office supplies (billing) General office salaries Direct materials used (wood, bolts, etc.) Utilities, factory $127,000 51,800 41,800 5,300 89,000 4,300 5,800 13,800 7,800 11,800 4,880 69,000 103,000 21,800 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.) Cost Behaviour Variable Fixed s 127.000 Selling and Administrative Cost Product Cost Direct Indirect 127.000 Cost Item Factory labour direct s < Prey 3 of 19 HE Next > search

Answer 1

				Cost Behaviour		Selling &	product cost
				Variable	fixed	Adm cost	Direct	indirect
Cost item
Factory labor,direct				127,000			127,000
Advertising					51,800	51,800
Factory supervision					41,800			41,800
Property taxes,factory building					5,300			5,300
Sales commissions				89,000		89,000
Insurance,factory					4,300			4,300
Depreciation ,office Equipment					5,800	5,800
lease cost,factory equipment					13,800			13,800
indirect materials,factory				7,800				7,800
Depreciation ,factory building					11,800			11,800
General office supplies (billing)				4,800		4,800
General office salaries					69,000	69,000
Direct materials used (wood ,bolts etc.)				103,000			103,000
utilities,factory				21,800				21,800
total costs				353,400	203600	220400	230,000	106600
2)	Average product cost			110.72	per patio set
3)	Decrease
4)	Yes	the president may expect a minimum price at					110.72