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 Interior Activity Production scheduling Material handling Machine setup Assembly Inspection 5-26 Activity-based costing, manufacturing. Decorative Doors, Inc., produces two types of doors, inte- rior 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 Decorative Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Decorative Doors production for the most recent year follows: $ $ 3,200 $ $ $ $ $ $ 125 $ 30 $ 16 $ 1.5 40 72 45 5,500 250 Exterior, 1,800 200 45 16 2.25 85 168 155 233,000 4,500 D 150 Activity Cost Activity Cost Driver 95,000 Production runs 45,000 Material moves 25,000 Machine setups 60,000 Machine-hours 8,000 Number of inspections E Total 125 240 200 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 Decorative Doors, the owners identify six activities as generating indirect costs: production scheduling, material handling, machine setup, assembly, inspection, and marketing. Decorative Doors collected the following data related to the indirect-cost activities: 10,000 400 cost $ 760 $ 187.50 esse F $ $ $ G 125 6 20 Interior H $ $ $ $ $ $ Exterior 30,400 $ 13,500 $ 5,625 $ 33,000 $ 5,000 $ 87,525 $ Instructions 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. 64,600 31,500 19,375 27,000 3,000 145,475 $

5-26 Activity-based costing, manufacturing. Decorative 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 machinehours. Recently, the owners of Decorative Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Decorative 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 Decorative Doors, the owners identify six activities as generating indirect costs: production scheduling, material handling, machine setup, assembly, inspection, and marketing. Decorative Doors collected the following data related to the indirect-cost activities: 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