6. Decorative Doors. an.. produces two types of doors, interior and exterior. The company's simple costing system has two direct-cost categories (materials and labor) and one indirect-cost pool. The simple costing system allocates indirect costs on the basis of machinehours. Recently. the owners of Decorative Doors have been concerned about a decline in the market share for their interior doors. usually their biggest seller. Information related to Decorative Doors production for the most recent year follows: Interior Exterior Units sold 3,200 1,800 Selling price 5 125 5 200 Direct material cost per unit 5 30 5 45 Direct labor cost per hour 5 15 5 15 Directlabor hours per unit 1.50 2.25 Product runs 40 35 Material moves ?2 168 Machine setup-s 45 155 Machine-hours 5,500 4,500 Number of inspections 250 150 The owners have heard of other companies in the industry that are nonr using an activitybased costing system and are curious how an ABC system would affect their product costing decisions. After analyzing the indirect-cost pool for Decorative Doors. the owners identify six activities as generating indirect costs: production scheduling, material handling, machine setup. assembly. inspection, and marketing. Decorative Doors collected the following data related to the indirect- cost activities: Activity Activity cost Activity cost driver Production scheduling 5 95,000 Production runs Material handling 5 45,000 Material moves Machine setup 5 25,000 Machine setups Assembly 5 60,000 Machin hours Inspection 5 8,000 Number of inspections Marketing costs were determined to be 3% of the sales revenue for each type of door