Problem 1-24A Cost Classification and Cost Behavior [LO1-1,LO1-2, LO1-3, LO1-4] The Dorilane Company

Problem 1-24A Cost Classification and Cost Behavior [LO1-1,LO1-2, LO1-3, LO1-4] The Dorilane Company specializes in producinga set of wood patio furniture consisting of a table and fourchairs. The set enjoys great popularity, and the company has ampleorders to keep production going at its full capacity of 4,200 setsper year. Annual cost data at full capacity follow: Direct labor $92,000 Advertising $ 99,000 Factory supervision $ 67,000 Propertytaxes, factory building $ 18,000 Sales commissions $ 65,000Insurance, factory $ 6,000 Depreciation, administrative officeequipment $ 2,000 Lease cost, factory equipment $ 17,000 Indirectmaterials, factory $ 20,000 Depreciation, factory building $108,000 Administrative office supplies (billing) $ 5,000Administrative office salaries $ 114,000 Direct materials used(wood, bolts, etc.) $ 426,000 Utilities, factory $ 43,000 Required:1. Enter the dollar amount of each cost item under the appropriateheadings. Note that each cost item is classified in two ways:first, as variable or fixed with respect to the number of unitsproduced and sold; and second, as a selling and administrative costor a product cost. (If the item is a product cost, it should alsobe classified as either direct or indirect.) 2. Compute the averageproduct cost of one patio set. (Round your answer to nearest wholedollar.) 3. Assume that production drops to only 1,000 setsannually. Would you expect the average product cost per set toincrease, decrease, or remain unchanged? Increase Decrease Remainunchanged

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