10.00 points The Dorilane Company specializes in producing a set of wood patio f

Question

10.00 points 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 2,000 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 $118,000 50,000 $ 40,000 $ 3,500 $80,000 $ 2,500 $ 4,000 12,000 $ 6,000 $ 10,000 $ 3,000 $ 60,000 $ 94,000 s 20,000 Required: 1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost itemm 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)

Explanation / Answer

Cost Behaviour Selling & Admin cost Product Cost Cost Item Variable Fixed Direct   Indirect Direct Labor     118,000 118,000 Advertising        50,000         50,000 Factory Supervision        40,000         40,000 Property Taxes Factory Building           3,500           3,500 Sales Commissions        80,000         80,000 Insurance factory             2,500           2,500 Depreciation Admin Office equipment           4,000            4,000 Lease Cost Factory Equipment        12,000         12,000 Indirect Materials Factory          6,000           6,000 Depreciation Factory Building        10,000         10,000 Admin office supplies           3,000            3,000 Admin office salaries        60,000         60,000 Direct Materials used (woods bolt)        94,000      94,000 Utlities Factory        20,000         20,000 Total     298,000      205,000       197,000 212,000         94,000

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