Lexington Doors, Inc. was incorporated in the province of British Columbia on October 28, 2011. The company makes custom doors for luxury homes. Although the operations of the company focus mainly on custom-built doors, once in a while, the company carries out mass production of standard doors on order. Allison Forsythe, the company's Chief Financial Officer, is studying the following report relating to the company's budgeted manufacturing overhead costs for the year 2022: Overhead Cost Pools Amount Purchasing $160,000 Production (cutting, milling, finishing) $400,000 Setting up machines $110,000 Inspecting $190,000 Utilities $110,000 Total budgeted overhead costs $970,000 For the last three years, the company has been charging overhead to products on the basis of machine hours. 110,000 machine hours have been budgeted for the year 2022. Allison has recently directed Sandra Chamberlain, her Finance Manager, to implement an activity- based costing system. At Sandra's request, the company's accountant and production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools. Overhead Cost Pools Activity Cost Drivers Total Drivers Purchasing Number of orders 700 Production (cutting, milling, finishing) Direct labour hours 50,000 Setting up machines Number of setups 2,000 Inspecting Number of inspections 2,000 Utilities Square metres occupied 90,000 During this month, the company received an order for 40 doors from a housing development contractor. The accountant prepares cost estimates for producing the 40 doors so that Sandra can submit a contract price per door to the contractor. The following data for the production of 40 doors is accumulated: Direct materials Direct labour Machine hours Direct labour hours Number of purchase orders Number of machine setups Number of inspections Number of square metres occupied $110,000 $150,000 16,000 12,000 40 90 210 4,000 Required: (20 marks) 1. Calculate the predetermined overhead rate using traditional (job) costing with machine hours as the basis. 4 marks 2. Calculate the manufacturing cost per door under traditional (job) costing. 6 marks 3. Calculate the manufacturing cost per door under the proposed activity-based costing. 6 marks 4. What would you recommend to management? Provide the reasoning for your recommendation. 4 marks