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?
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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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
$
Required 1 Required 2 Required 3
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?
Complete this question by entering your answers in the tabs below.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb0c53c3c-d25b-4f46-ae7f-d9559756d1d4%2Fd2bab849-095d-45fc-aacb-9e7f0cd4677c%2Fg2nwozl_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
$
Required 1 Required 2 Required 3
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?
Complete this question by entering your answers in the tabs below.
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
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.)
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
0
$
Fixed
0
Period (Selling
or
Administrative)
Cost
$
0 $
Required 2 >
Product Cost
Direct
0 $
Indirect
0
S
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education