Question

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 3,900 sets per year. Annual cost data at full capacity follow 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 $ 88,000 $ 96,000 69,000 $ 17,000 $65,000 $ 7,000 $2,000 $ 11,000 $20,000 $ 103,000 $ 6,000 $ 113,000 $ 429,000 $49,000

Answer 1

			Cost behavior		selling & adm cost	product cost
Cost Item			Variable	Fixed		Direct	Indirect
Direct labour			88000			88000
Advertising				96000	96000
Factory supervision				69000			69000
Property taxes , factory building				17000			17000
Sales commissions			65000		65000
Insurance, factory				7000			7000
Depreciation, adm office equipment			2000		2000
Lease cost factory equipment				11000			11000
Indirect material, factory			20000				20000
Depreciation, factory building			103000				103000
Administrative office supplies(billing)				6000	6000
Administrative office salaries				113000	113000
Direct material used (wood, bolts, etc)			429000			429000
Utilities, factory				49000			49000
Total costs			707000	368000	282000	517000	276000