Delightful 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 Delightful Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Delightful Doors production for the most recent year follows: B (Click the icon to view the production data.) 0 (Click the icon to view additional information : - X More info Requirements The owners have heard of other companies in the industry that are now using 1. Calculate the cost of an interior door and an exterior door under the existing an activity-based costing system and are curious how an ABC system would affect their simple costing system. product costing decisions. After analyzing the indirect-cost pool for Delightful Doors, the 2. Calculate the cost of an interior door and an exterior door under owners identify six activities as generating indirect costs: production scheduling, an activity-based costing system. material handling, machine setup, assembly, inspection, and marketing. Delightful Doors & 2 . collected the following data related to the indirect-cost activities: 3. Compare the costs of the doors in requirements 1 and 2. Why do the simple the rate. (Round your answer to the nearest cent. Abbreviations used: and a_clivily-based costing systems differ in the cost of an interior door and an Activity Activity Cost Activity-Cost Driver exterior door? 4. How might Delightful Doors, Inc., use the new cost information from Production scheduling 109,200 Production runs !ts agtivitybased costing system to address the declining market share for Material handling 42,720 Material moves interior doors? Machine setup 26,000 Machine setups Assembly 80,000 Machine-hours ) ) calculations to the nearest cent and your final answers to the nearest Inspection 22,100 Number of inspections m Marketing costs were determined to be 5% of the sales revenue for each type of door. Direct manufacturing Tabor cost [F| - X Indirect cost allocated Total costs Interior Exterior Now calculate the cost per unit for each product under the simple costing system. (Round your answers to the nearest cent.) Units sold 3,000 1,600 Simple costing system Interior Exterior Selling price $ 150 240 Total cost per unit Direct material cost per unit $ 60 $ 80 Requirement 2. Calculate the cost of an interior door and an exterior door under an activity-based costing system. Direct manufacturing labor cost per hour $ 148 14 Begin by calculating the ABC allocation rate for each activity. First select the formula, then enter the applicable amounts and calculate the rates. (Round your answers to { Direct manufacturing labor-hours per untt 0 sy production, sch. = scheduling, qty. = quantity.) Production runs 45 95 & = ABC allocation rate Material moves 75 165 Prod. sch. + = Il Machine setups 45 155 Machine-hours 6,500 3,500 Number of inspections 210 130 Requirement 1. Calculate the cost of an interior door and an exterior door under the existing simple costing system. Before calculating the cost of an interior and exterior door, begin by calculating the overhead rate under the simple costing system. First select the formula, then enter the applicable amounts and calculate the rate. (Round your answer to the nearest cent. Abbreviations used: bgt. = budgeted, qty = quantity.) Budgeted overhead rate Simple costing system Now calculate the cost of an interior door and an exterior door under the existing simple costing system. Start by calculating total costs and then calculate the cost per unit for each product. (Round interim calculations to the nearest cent and your final answers to the nearest whole dollar.) Simple costing system Interior Exterior Direct materials cost Direct manufacturing labor cost Indirect cost allocated Total costs Now calculate the cost per unit for each product under the simple costing system. (Round your answers to the nearest cent.) Simple costing system Interior Exterior Total cost per unitRequirement 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. (Round your answers to the nearest cent. Abbreviations used: Bgt. = Budgeted, mach. = machine, mat. = material, prod. = production, sch. = scheduling, gty. = quantity.) 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 nearest cent and your final answers to the nearest whole dollar.) 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 ABC. (Round your answers to the nearest cent.) ABC costing system Interior Exterior Total cost per unit Requirement 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? Relative to the ABC system, the simple costing system interior doors and | exterior doors. Under the simple costing system, the | is driving the amount of overhead allocated to the interior doors. The ABC study reveals that each exterior door requires |. Thisis reflected in the Y| allocated to exterior doors in the ABC system. Requirement 4. How might Delightful Doors, Inc., use the new cost information from its activity-based costing system to address the declining market share for interior doors? (Select all choices that apply.) [1A. [1B. JcC. D. [JE. (1 F. Delightful Doors should consider increasing the price of its exterior doors, depending on the competition it faces in this market. Delightful Doors can use the ABC information to improve its own operations. It could examine each of the indirect cost categories and analyze whether it would be possible to deliver the same level of service, but consume fewer indirect resources, or find a way to reduce the per-unit-cost-driver cost of some of those indirect resources. Delightful Doors, Inc. should consider increasing the price of its interior doors depending on the competition it faces in this market. Delightful Doors, Inc. should consider decreasing the price of its interior doors to be more competitive. Delightful Doors, Inc. can use the information revealed by the ABC system to change its pricing based on the ABC costs. Delightful Doors, Inc. should consider decreasing the price of its exerior doors to be more competitive