I need Q$3,$ Q$4-$a$,$b$.$

CASE $1-26$ Cost Classification and Cost Behavior LO$1-1,$ LO$1-2,$ LO$1-3,$ LO$1-4$

The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs.Managerial Accounting and Cost Concepts

Required:

Prepare an answer sheet with the column headings shown below. Enter each cost item on your

answer sheet, placing the dollar amount under the appropriate headings. As examples, this has

been done already for the first two items in the list above. 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 as shown.$)$

$*$To units of product.

Total the dollar amounts in each of the columns in $(1)$ above. Compute the average product

cost of one patio set.

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? Explain. No computations are necessary.

Refer to the original data. The president's brother$-$in$-$law has considered making himself a

patio set and has priced the necessary materials at a building supply store. The brother$-$in$-$law

has asked the president if he could purchase a patio set from the Dorilane Company $"$at cost$,"$

and the president agreed to let him do so$.$

a$.$ Would you expect any disagreement between the two men over the price the brother$-$

in$-$law should pay? Explain. What price does the president probably have in mind?

The brother$-$in$-$law?

b$.$ Because the company is operating at full capacity, what cost term used in the chapter

might be justification for the president to charge the fuli, regular price to the brother$-$in$-$

law and still be selling $"$at cost$"?$

The company has enough customer demand to justify producing its full capacity of $2,000$ sets per

year. Annual cost data at full capacity follow: