Heritage Company manufactures a beautiful bookcase that enjoys widespread popularity

Heritage Company manufactures a beautiful bookcase that enjoys widespread popularity. The company has a backlog of orders that is large enough to keep production going indefinitely at the plant\'s full capacity of 4,000 bookcases per year. Annual cost data at full capacity follow:





Direct materials used (wood and glass)

$

430,000

Administrative office salaries

$

110,000

Factory supervision

$

70,000

Sales commissions

$

60,000

Depreciation, factory building

$

105,000

Depreciation, administrative office equipment

$

2,000

Indirect materials, factory

$

18,000

Factory labor (cutting and assembly)

$

90,000

Advertising

$

100,000

Insurance, factory

$

6,000

Administrative office supplies (billing)

$

4,000

Property taxes, factory

$

20,000

Utilities, factory

$

45,000



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 either 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.) (Leave no cells blank - be certain to enter \"0\" wherever required. Omit the \"$\" sign in your response.)

2.

Compute the average product cost per bookcase. (Omit the \"$\" sign in your response.)

3.

Due to a recession, assume that production drops to only 2,000 bookcases per year. Would you expect the average product cost per bookcase to increase, decrease, or remain unchanged?

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