ABC costing system	Interior	Exterior
Direct materials cost	$115,500	$104,500
Direct manufacturing labor cost	58,080	41,800
Indirect costs allocated:
Production scheduling	33,750	71,250
Materials handling	13,200	29,040
Machine setup	3,900	18,850
Assembly	27,500	22,500
Inspection	11,250	7,650
Marketing	20,625	19,475
Total costs	$283,805	$315,065

ABC costing system Total cost per unit

Interior $86.00

Exterior $165.82

ABOVE IS AN EXAMPLE PLEASE USE THESE NUMBERS

Doors, Inc., 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 machine-hours. 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:

Data table

	Interior	Exterior
Units sold	3,000	1,600
Selling price	$150	$225
Direct material cost per unit	$40	$60
Direct manufacturing labor cost per hour	$11	$11
Direct manufacturing labor-hours per unit	1.50	2.25
Production runs	45	95
Material moves	75	165
Machine setups	35	150
Machine-hours	6,000	4,000
Number of inspections	220	140

Bqt. total costs in indirect cost pool Bgt. total qty of cost allocation base = Budgeted overhead rate Simple costing system $278,99010,000=$27.90 per machine-hour Total costs $327,030$271,850 Simple costing system Interior Exterior Direct materials cost $115,500$104,500 Direct manufacturing labor cost 58,08041,800 Indirect cost allocated 153,450125,550 Total costs $327,030$271,850 Simple costing system Total cost per unit Interior $99.10 Exterior $143.08 Bgt. total Bqt. total costs in indirect cost pool Bgt. total qty of cost allocation base = Budgeted overhead rate Simple costing system $278,99010,000=$27.90 per machine-hour Total costs $327,030$271,850 Simple costing system Interior Exterior Direct materials cost $115,500$104,500 Direct manufacturing labor cost 58,08041,800 Indirect cost allocated 153,450125,550 Total costs $327,030$271,850 Simple costing system Total cost per unit Interior $99.10 Exterior $143.08 Bgt. total