Question 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 4,200 sets per year. Annual cost data at full capacity follow: Direct labor $95,000 www Advertising $104,000 $72,000 Factory supervision Property taxes, factory building $25,000 Sales commissions Insurance, factory $61,000 $8,000 Depreciation, administrative office equipment $3,000 Lease cost, factory equipment $15,000 Indirect materials, factory $21,000 Depreciation, factory building $104,000 Administrative office supplies (billing) $4,000 Administrative office salaries $106,000 Direct materials used (wood, bolts, etc.) $430,000 Utilities, factory $47,000 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?

Definition Definition Structural system an enterprise uses to collect, store, report, retrieve, and process financial data. Accounting information systems are used by business analysts, auditors, accountants, and consultants for accurate and efficient access to financial data.