Data table Interior Exterior 3,000 1,600 $ 160 $ 250 40 $ 50 CA 13 $ 13 1.40 2.35 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 45 95 75 165 140 30 5,500 4,500 170 250 Print Done - More info 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 Daring Doors, the owners identify six activities as generating indirect costs: production scheduling, material handling, machine setup, assembly, inspection, and marketing. Daring Doors collected the following data related to the indirect-cost activities: Activity Activity Cost Activity-Cost Driver Production scheduling 98,000 Production runs Material handling 43,200 Material moves Machine setup 20,400 Machine setups Assembly $ 50,000 Machine-hours Inspection $ 14,700 Number of inspections Marketing costs were determined to be 2% of the sales revenue for each type of door. $ $ Print Done - X Requirements 1. Calculate the cost of an interior door and an exterior door under the existing simple costing system. 2. Calculate the cost of an interior door and an exterior door under an activity-based costing system. 3. Compare the costs of the doors in requirements 1 and 2. Why do the simple and activity-based costing systems differ in the cost of an interior door and an exterior door? 4. How might Daring Doors, Inc., use the new cost information from its activity-based costing system to address the declining market share for interior doors? Print Done Requirement 2. Calculate the cost of an interior door and an exterior door under an activity-based costing system Begin by calculating the ABC allocation rate for each activity. First select the formula, then enter the applicable amounts and calculate the rates ABC allocation rate Prod. sch Mat handling Mach setup Assembly Inspection Now calculate the cost of an interior door and an exterior door under an activity-based costing system (Round interim calculations to the neares ABC costing system Interior Exterior Direct materials cost Direct manufacturing labor cost Indirect costs allocated Production scheduling Materials handling Machine setup Assembly Inspection Marketing Total costs Now calculate the cost per unit for each product under 180 (Mound your towers to the core) ABC costing system Interior Exterior Totul couper une Requirement 3. Compare the costs of the doors in regarments 1 and 2 Why do the simple and action based coding systems differ in the cost of an interior and exterior door? Relate to the ABC system. the simple conting system Interior doors and ir doors Under the simple costing system the s driving the amount This is reflected in the allocated to exterior doors in the ABC wym Requirement 4. How might Elegant Doon Inc une the new cost information from its activity based conting system to address the declining market share for interior doors? Select a choices that sech) A Elegant Doon. In should consider decreasing the price of its Interior doors to be more competitive O Elegant Doors, Inc. can use the information revealed by the ABC system to change its pricing based on the ABC coats DC Elegant Door. In should consider decreasing the price of tseverior doors to be more competitive 0. Elegant Doors, Ine should consider noressing the price of the interior doors depending on the competition faces in this market
