Problem 2-20 Cost Classification and Cost Behaviour (LO1, LO2, LOS, LO6] The Outdoor Dining Company specializes in produ

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Problem 2 20 Cost Classification And Cost Behaviour Lo1 Lo2 Los Lo6 The Outdoor Dining Company Specializes In Produ 1 (39.97 KiB) Viewed 57 times

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Problem 2-20 Cost Classification and Cost Behaviour (LO1, LO2, LOS, LO6] The Outdoor Dining 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 1,600 sets per year. Annual cost dato at full capacity follow: Direct labour Advertising Factory supervision Property taxes, factory building Sales commission Insurance, factory Depreciation, administrative office equipment Lease cont, factory equipment Indirect materials, factory Depreciation, factory Administrative office supplies Direct materials used (wood, bolta, ete. ) Utilities, factory $144,300 $ 32,800 $ 42,800 $ 4,000 # 51,500 $ 3,200 $ 3,500 $ 13,500 $ 4,200 $ 15,300 $ 2,600 $ 53,200 $ 23,600
of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, os elther variable or fixed with respect to the number of units produced and sold, and second, as either 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 Behavior Product Cost Balling and Administrative Cost Cost Item Variablo Fixed Direct Indirect Direct labour Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory Administrative office supplies Direct materials used (wood, bolts, otc.) Utilities, factory Total costs
2. Compute the average product cost per patio set. (Round your answer to 2 decimal places.) Average product cost per patio set 3. Due to reduced demand, assume that production drops to only 1,000 sets per year. Would you expect the average product cost per patio set to increase, decrease, or remain unchanged? Increase Decrease Remain unchanged 4. This part of the question is not part of your Connect assignment.