(Solved): Calculate total overhead at full capacity. QUESTION 4 If production decreased to 1,000 patio sets ...

Calculate total overhead at full capacity. QUESTION 4 If production decreased to 1,000 patio sets, calculate total fixed costs. QUESTION 5 What influences the validity of a company's assumptions about how its costs behave? The Docilane 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 canacitv of 2.000 sets ber vear. Annual cost data at full capacity follow: Product Cost Direct - 212,000 Indirect $?94,000$ Total $?306,000$ $\#$ of sets produced $?2,000$ Average cost per $\$(306,000/2,000)?153$ With a drop in production from 2,000 sets to 1000 sets, the variable cost per set will remain unchanged however, the fixed cost per set will increase as the total fixed cost which is constant is spread over a lesser number of sets. Hence, the average product cost per set will increase.