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 Daring Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Daring Doors production for the most recent year follows:

Interior		Exterior
Units sold	3,000		1,600
Selling price	$140		$230
Direct material cost per unit	$45		$70
Direct manufacturing labor cost per hour	$15		$15
Direct manufacturing labor-hours per unit	1.60		2.40
Production runs	45		95
Material moves	75		165
Machine setups	55		135
Machine-hours	6,500		3,500
Number of inspections	220		140

he owners have heard of other companies in the industry that are now using anactivity-based costing system and are curious how an ABC system would affect their product costing decisions. After analyzing the indirect cost pool for

DaringDaring

Doors, the owners identify six activities as generating indirect costs: production scheduling, material handling, machinesetup, assembly, inspection, and marketing.

DaringDaring

Doors collected the following data related to the indirect cost activities:

Activity	Activity Cost		Activity Cost Driver
Production scheduling	$107,800		Production runs
Material handling	$45,120		Material moves
Machine setup	$23,750		Machine setups
Assembly	$60,000		Machine-hours
Inspection	$12,600		Number of inspections

Marketing costs were determined to be 2% of the sales revenue for each type of door.

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 anactivity-based costing system.