=+how an ABC system would affect their product costing decisions. After analysing the indirect cost pool for Smart Doors, six activities were identified as generating indirect costs: production scheduling, materials handling, machine set-up, assembly, inspection and marketing. Smart Doors collected the following data related to the indirect cost activities:

Activity Activity cost

$ Activity-cost driver Production scheduling 95 000 Production runs Materials handling 45 000 Material moves Machine set-up 25 000 Machine set-ups Assembly 60 000 Machine-hours Inspection 8 000 Number of inspections Marketing costs were determined to be 3% of the sales revenue for each type of door.

242 Chapter 6: Activity-based costing and activity-based management M06_HORN3377_02_LT_C06.indd 242 2/09/13 3:26 PM Required 1 Calculate the cost of an interior door and an exterior door under the existing simple costing system.