Case 1-26 (Algo) Cost Classification and Cost Behavior [LO1-1, LO1-2, LO1-3, LO1-4] The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 4,100 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 $ 89,000 $ 104,000 $ 66,000 $ 22,000 $ 58,000 $ 6,000 $ 2,000 $ 12,000 $ 16,000 $ 102,000 $ 3,090 $ 106,000 $ 434,000 $ 46,000 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 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? Answer is complete but not a
Case 1-26 (Algo) Cost Classification and Cost Behavior [LO1-1, LO1-2, LO1-3, LO1-4] The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity of 4,100 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 $ 89,000 $ 104,000 $ 66,000 $ 22,000 $ 58,000 $ 6,000 $ 2,000 $ 12,000 $ 16,000 $ 102,000 $ 3,090 $ 106,000 $ 434,000 $ 46,000 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 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? Answer is complete but not a
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Fix the wrong parts, please.
Transcribed Image Text:Required 1 Required 2 Required 3
Enter the dollar amount of each cost Item under the appropriate headings. 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.)
Period (Selling
Cost Item
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
Total costs
Cost Behavior
Variable
$ 89,000
58,000
16,000 ✓
4,000 X
434,000 ✓
46,000
$ 647,000
Fixed
104,000
66,000
22,000
6,000
2,000
21,000
102,000
106,000 ✓
or
Administrative)
Cost
$429,000 $
104,000 ✓
58,000 ✓
2,000 →
4,000 X
105,000 ✓
$
Required 2 >
Product Cost
Direct
89,000✔
434,000✔
274,000 $ 523,000
Indirect
66,000✓
22,000✔
6,000 ✓
12,000✔
16,000✓
102,000✔
46,000✔
$ 270,000
![Case 1-26 (Algo) Cost Classification and Cost Behavior [LO1-1, LO1-2, LO1-3, LO1-4]
The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough
customer demand to justify producing its full capacity of 4.100 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
$ 89,000
$ 104,000
$ 66,000
$ 22,000
$
58,000
$
6,000
$
2,000
$
12,000
$ 16,000
$ 102,000
$ 3,000
$ 106,000
$ 434,000
$ 46,000
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
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?
Answer is complete but not entirely correct.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb0c53c3c-d25b-4f46-ae7f-d9559756d1d4%2Fd9956fa2-1cae-4416-9a60-87adf41672cf%2Fl0f4jfi_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Case 1-26 (Algo) Cost Classification and Cost Behavior [LO1-1, LO1-2, LO1-3, LO1-4]
The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough
customer demand to justify producing its full capacity of 4.100 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
$ 89,000
$ 104,000
$ 66,000
$ 22,000
$
58,000
$
6,000
$
2,000
$
12,000
$ 16,000
$ 102,000
$ 3,000
$ 106,000
$ 434,000
$ 46,000
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
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?
Answer is complete but not entirely correct.
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