Activity-based Costing Pro Decorative Doors, Inc., produces two types of doors, inte- rior 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: Interior Exterior Units sold 3,200 1,800 Selling price 125 200 Direct material cost per unit 30 45 Direct Manufacturing labor cost per hour 16 16 Direct manufacturing labor-hours per unit 2.25 Production runs Material moves Machine setups Machine-hours Number of inspections 1.50 40 85 72 168 45 155 5,500 250 4,500 150 The owners have heard of other companies in the industry that are now using an activity-based 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 Production scheduling Material handling Machine setup Assembly Inspection Cost driver Production runs Material moves Activity cost 125,000 45,000 25,000 60,000 8,000 Number of inspections Machine set ups Machine hours ion 1: on 2: Questions What is the cost per unit of Interior using the existing costing system? What is the cost per unit of Exterior using the existing costing system? Possible Scores 5 5 on 3: What is the cost per unit of Interior using ABC system? 5 n 4: What is the cost per unit of Interior using ABC system? 5