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Case $1-26($Algo$)$ 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. The company has enough customer demand to justify producing its full capacity of $4,000$ sets per year. Annual cost data at full capacity follow:

Direct labor $ $85,000$

Advertising $ $104,000$

Factory supervision $ $66,000$

Property taxes, factory building $ $22,000$

Sales commissions $ $56,000$

Insurance, factory $ $5,000$

Depreciation, administrative office equipment $ $2,000$

Lease cost, factory equipment $ $17,000$

Indirect materials, factory $ $19,000$

Depreciation, factory building $ $108,000$

Administrative office supplies $($billing$)$ $ $5,000$

Administrative office salaries $ $107,000$

Direct materials used $($wood$,$ bolts, etc.$)$ $ $429,000$

Utilities, factory $ $43,000$

Required:

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.$)$

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?