Stylish 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 Stylish Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Stylish 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 Requirement 2. Calculate the cost of an interior door and an exterior door under an activity-based costing system. Begin by calculating the ABC allocation rate for each activity. First select the formula, then enter the applicable amounts and calculate the rates. (Round your answers to the nearest cent. Abbreviations used: Bgt. = Budgeted, mach. = machine, mat. = material, prod. = production, sch. = scheduling, qty = quantity. ABC allocation rate Prod. sch Mat, handling Mach, setup Assembly Inspection Now calculate the cost of an interior door and an exterior door under an activity-based costing system. (Round interim calculations to the nearest cent and your final answers to the nearest whole dollar.) Interior Exterior ABC costing system Direct materials cost Direct manufacturing labor cost Indirect costs allocated: Indirect costs allocated: Production scheduling Materials handling Machine setup Assembly Inspection Marketing Total costs Now calculate the cost per unit for each product under ABC. (Round your answers to the nearest cent.) Interior Exterior ABC costing system Total cost per unit Requirement 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 and exterior door? Relative to the ABC system, the simple costing system interior doors and exterior doors. Under the simple costing system, the is driving the Interior Exterior ABC costing system Total cost per unit Requirement 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 and exterior door? is driving the Relative to the ABC system, the simple costing system v interior doors and exterior doors. Under the simple costing system, the amount of overhead allocated to the interior doors. The ABC study reveals that each exterior door requires allocated to exterior doors in the ABC system. V. This is reflected in the Requirement 4. How might Stylish Doors, Inc., use the new cost information from its activity-based costing system to address the declining market share for interior doors? (Select all choices that apply.) A. Stylish Doors can use the ABC information to improve its own operations. It could examine each of the indirect cost categories and analyze whether it would be possible to deliver the same level of service, but consume fewer indirect resources, or find a way to reduce the per-unit-cost-driver cost of some of those indirect resources. B. Stylish Doors, Inc. should consider increasing the price of its interior doors depending on the competition it faces in this market. C. Stylish Doors, Inc. should consider decreasing the price of its interior doors to be more competitive. D. Stylish Doors, Inc. can use the information revealed by the ABC system to change its pricing based on the ABC costs. E. Stylish Doors should consider increasing the price of its exterior doors, depending on the competition it faces in this market. DE Stylish Doors, Inc. should consider decreasing the price of its exerior doors to be more competitive Data table Interior Exterior 1,900 225 $ $ 55 $ $ 10 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 3,300 145 $ 40 $ 10 $ 1.20 40 74 50 2.00 90 164 130 4,000 6,000 240 160 More info 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 $ 101,400 Production runs Material handling 42,840 Material moves Machine setup 21,600 Machine setups Assembly 60,000 Machine-hours Inspection 16,000 Number of inspections Marketing costs were determined to be 4% of the sales revenue for each type of door. $ $ $