Use the data to answer the question.

CASE 1-26 Cost Classification and Cost Behavior L01-1, L01-2, L01-3, L01-4 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 2,000 sets per year. Annual cost data at full capacity follow: Direct labor .............. Advertising. Factory supervision ............... Property taxes, factory building.......... Sales commissions. . . . . . . . . . . . Insurance, factory. Depreciation, administrative office equipment...... Lease cost, factory equipment......... Indirect materials, factory ..... Depreciation, factory building ............ Administrative office supplies (billing)........... Administrative office salaries. Direct materials used (wood, bolts, etc.). ... Utilities, factory... $118,000 $50,000 $40,000 $3,500 $80,000 $2,500 $4,000 $12,000 $6,000 $10,000 $3,000 $60,000 $94.000 $20,000 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? Because the company is operating at full capacity, what cost term used in the chapter might be justification for the president to charge the full, regular price to the brother-in- law and still be selling "at cost