Question

he Dorilane Company produces a set of woo ustomer demand to justify producing its full capacity of 3,900 sets per year. Annual cost data at full capacity follow d patio furniture consisting of a table and four chairs. The company has enou 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 $89,000 $98,000 66,000 s 20,ee0 58,ee0 7,000 $ 2,000 $ 18,e00 $ 17,000 $109,000 $ 4,000 $111,000 $432,000 se,eee ministrative office supplies (billing) Administrative office salaries Direct materials used (wood, bolts, etc.) Utilities, factory Required 1. Enter the dollar amount of each cost item under the appropriate headings. Nate 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.) 2. Compute the average product cost of one patio set 3. Assume that production drops to only 1,000 sets annually. Would you expect the average product cost per set to increase decrease, or remain unchanged? < Prev 20' 3 Next>

Answer 1