Chapter 5, Problem 26E R6 Bookmarks) Show all steps: Activity-based costing, manufacturing. Decorative 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 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 3,200 S 125 Units sold Selling price Direct material cost per unit Direct manufacturing labor cost per hour Direct manufacturing labor-hours per unit Production runs Material moves Machine setups Machine-hours Number of inspections 1,800 200 S 16 S 16 1.50 40 72 45 2.25 85 168 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 Activity 95,00 $45,00 $25,00 S60,00 S 8,00 Marketing costs were determined to be 3% of the sales r 1. Calculate the cost of an interior door and an exterio 2. Calculate the cost of an interior door and an exterio 3. Compare the costs of the doors in requirements 1 ar systems differ in the cost of an interior door and an 4. How might Decorative Doors, Inc., use the new cost Required