The Dorilane Company specializes in producing a set of wood patio turniture cons

Question

The Dorilane Company specializes in producing a set of wood patio turniture consisting of a table and tour chairs. The set enjoys great populanty, and the company has ample orders to keep production going at its full capacity at 4,0do sets per year nnual cost data at fuil capacity tollow $ 93,000 S 105.000 S 67,000 S 24.000 S 56,000 5 8,000 S 3.000 5 15.000 S 17,000 5 107 000 S 5.000 S 109,000 5 425 000 S 44,000 Diract labor Factory supervision Property laxes, faclory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cot, fadlory equipment Indirect materials, factory Depriciation, factory building Administrative office s Administrative office s Direct materials used (waod, balls, ec) Utilitles, factory (billing) Required: 1. Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first as varable or foxed with respect to the number of units produced and sold, and second, as a selling and administrative cost or a product cost. f the item is a product cost, il should also be classified as either direct or indirect.) (If your answer is zero, leave the cell blank.) Cost Behavior Product Cost Variable Fixed Direct labor Facdory supervision Property taxes, factory building Sales commissions Insurance,factory Depreclation, administrative office equipment Lease cost, factory equipment Indirect materials, lactory Depreciation, factory building Administrative office supplis (biling) Adminigtrative office galaries Direct materials used (wood, bolts, etc.) Ulililies, actary Total costs 01 $

Explanation / Answer

cost Behaviour period product cost Variable Fixed (sell&adm) Direct indirect cost Item Direct labor 93,000 93,000 Advertising 105,000 105,000 Factory supervision 67,000 67,000 Prpoerty taxes,Factory building 24,000 24,000 Sales commissions 56,000 56,000 insurance factory 8,000 8,000 Depreciation,administrative office equipment 3,000 3,000 lease cost,factory equipment 16,000 16,000 indirect materials,factory 17,000 17,000 Depreciation,factory building 107,000 107,000 Administrative office supplies(billing) 5,000 5,000 Adminsitrative office Salaries 109,000 109,000 Direct materials used 425,000 425,000 Utilities,factory 44,000 44,000 total costs 640,000 439000 278000 518,000 283000 2) Average product cost = (518000+283000)/4000 200

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