Fancy Doors, Inc. produces two types of doors, Interior and Exterior. The costs include direct materials, direct labor, and overhead that is currently applied using a traditional system that uses the single cost driver of machine hours to apply its overhead of $466,000 to the products, Fancy Doors has been experiencing a decline in the market share for the interior doors, their main product. More information about Fancy Doors follows: EXTERIOR 1,800 $90 1.5 hours 2.25 hours $32 $32 40 85 72 168 # of machine setups 45 155 # of machine hours: 5,500 4,500 # of Inspections 250 150 Using the above information: (NOTE: MUST SHOW ALL CALCULATIONS FOR CREDIT) (1) Calculate the predetermined overhead rate using the current system: UNITS PRODUCED Direct Material $cost per unit Direct Labor HOURS per unit Direct Labor RATE per hour # of production runs # of material moves INTERIOR 3,200 $60 (2) Calculate the TOTAL amount of overhead that would be allocated to: (a) INTERIOR DOORS Direct Material per unit Direct Labor unit Overhead per unit TOTAL Cost per unit (3) Calculate the OVERHEAD COST PER UNIT for each product: (a) INTERIOR DOORS (b) EXTERIOR DOORS (4) Complete the table below which shows TOTAL cost per unit for each product (b) EXTERIOR DOORS INTERIOR $ $ 46 $ EXTERIOR SSSS $ $ $ $ 90 Fancy Doors has decided to adopt an Activity-Based Costing system with the following 5 cost pools: ACTIVITY ACTIVITY COST Production scheduling $190,000 ACTIVITY COST DRIVER Production runs Material Moves Materials Handling $90,000 Machine setup $50,000 $120,000 $16,000 $466,000 (5) Develop the 5 ABC rates that will be used to allocate overhead costs to the products: Assembly Inspection. Total Overhead Production Scheduling: Materials Handling: Machine setup: Assembly: Inspection: (6) Calculate the TOTAL $amount of overhead that would be allocated to the 2 products: EXTERIOR Production scheduling Materials Handling Machine Setup Assembly Inspection INTERIOR Direct Material per unit Direct Labor unit Overhead per unit Show calculations below (7) Calculate the OVERHEAD COST PER UNIT for each product: (a) INTERIOR DOORS (b) EXTERIOR DOORS (4) Complete the table below which shows TOTAL cost per unit for each product using ABC INTERIOR $ $ $ Machine setups Machine Hours Inspections 48 TOTAL Cost per unit $ Conclusion: The traditional system (page 1) EXTERIOR 90 72 $ $ $ $ (over or undercosted) INTERIOR