Requirements 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 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: (Click the icon to view the production data.) i (Click the icon to view additional information.) Read the requirements. 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. 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.) 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? Print 4. How might Fancy Doors, Inc., use the new cost information from its activity-based costing system to address the declining market share for interior doors? Done More info Budgeted overhead rate Simple costing system C 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 Production scheduling Material handling 70,300 42,550 22,400 30,000 Machine setup Assembly Machine-hours Inspection 27,300 Number of inspections Marketing costs were determined to be 3% of the sales revenue for each type of door. $ $ $ $ $ Activity-Cost Driver Production runs Material moves Machine setups Data table Units sold Selling price 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 Print $ $ $ Done Interior 3,000 130 $ 55 $ 20 $ 1.60 30 70 40 Exterior 6,500 250 1,600 205 70 20 2.30 65 160 135 3,500 170 X