Question

Saved 3 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 3,600 sets per quarter Quarterly cost data at this level of operations follow: 5 001152 Factory labour, direct Advertising Factory supervision Property taxes, factory building Sales comissions Insurance, factory Depreciation, office equipment Lease cost, factory equipment Indirect saterials, factory Depreciation factory building General office supplies (billing) General office salaries Direct materials used (wood, bolts, etc.) utilities, factory $125,000 51,600 41,609 5,100 88,000 4,100 5,600 13,600 7,600 11,600 4,600 68,000 102,000 21,600 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) Cost Product Cost Direct Indirect 126 000 $ $ 41.600 5,100 Cost Behaviour Selling and Variable Administrative Fixed 126 000 51.600 51 600 41.600 5.100 18 000 88 000 4.100 5.600 5600 13.600 7.500 11,600 4600 4.600 58.000 Cost Item 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, balts, etc) Utilities factory Total costs "To units of product 4 100 13 600 7 600 11 600 6.800 102.000 102,000 21 600 349 8005 5 201 2005 156 6005 220 000 $ 21 600 105 200

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Answer 1

				Cost Behaviour		Selling &	product cost
				Variable	fixed	Adm cost	Direct	indirect
Cost item
Factory labor,direct				126,000			126,000
Advertising					51,600	51,600
Factory supervision					41,600			41,600
Property taxes,factory building					5,100			5,100
Sales commissions				88,000		88,000
Insurance,factory					4,100			4,100
Depreciation ,office Equipment					5,600	5,600
lease cost,factory equipment					13,600			13,600
indirect materials,factory				7,600				7,600
Depreciation ,factory building					11,600			11,600
General office supplies (billing)				4,600		4,600
General office salaries					68,000	68,000
Direct materials used (wood ,bolts etc.)				102,000			102,000
utilities,factory				21,600				21,600
total costs				349,800	201200	217800	228,000	105200
2)	Average product cost			116	per patio set
3)	Decrease
4)	Yes	the president may expect a minimum price at					116