Durable 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 Durable Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Durable Doors production for the most recent year follows: (Click the icon to view the production data.) (Click the icon to view additional information.) Read the requirements. 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 Requirements per inspection per machine-hour per machine setup per material move per production run 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 Durable Doors, Inc., use the new cost information from its activity-based costing system to address the declining market share for interior doors? Print Done Durable 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 Durable Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Durable Doors production for the most recent year follows: (Click the icon to view the production data.) (Click the icon to view additional information.) Read the requirements. 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 Data table Bgt. total costs in indirect cost pool More info Bgt. total direct costs X Units sold Selling price Bgt. total direct labor costs Bgt. total direct material costs Bgt. total qty of cost allocation base Total number of units sold 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 Durable Doors, the owners identify six activities as generating indirect costs: production scheduling, material handling, machine setup, assembly, inspection, and marketing. Durable Doors collected the following data related to the indirect-cost activities: Activity Activity Cost Activity-Cost Driver Production scheduling $ 96,200 Production runs Material handling $ 40,460 Material moves Machine setup 24,700 Machine setups Assembly 50,000 Machine-hours Inspection $ 20,400 Number of inspections 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 Marketing costs were determined to be 3% of the sales revenue for each type of door. Print Done Interior Exterior 3,100 1,700 $ 145 $ 220 45 $ 60 14 $ 14 1.60 2.40 40 90 74 164 50 140 6,000 4,000 210 130