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

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

Fancy

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

Fancy

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

Activity	Activity Cost		Activity-Cost Driver
Production scheduling	$99,400		Production runs
Material handling	$43,680		Material moves
Machine setup	$25,200		Machine setups
Assembly	$30,000		Machine-hours
Inspection	$24,700		Number of inspections

Marketing costs were determined to be 4% of the sales revenue for each type of door.

Interior Exterior

Units sold

3200 1800

Selling price

$120. $195

$195

Direct material cost per unit

$45 $75

Direct manufacturing labor cost per hour

$17. $17

Direct manufacturing labor-hours per unit

1.30

2.25

Production runs

45

95

Material moves

75

165

Machine setups

45

155

Machine-hours

6,000

4,000

Number of inspections

230

150