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b. Calculate the cost of an interior door and an exterior door under an activity-based system. Q3. 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 based on machine-hours. Recently, the owners of Fancy Doors have been concerned about a decline in the market share for one of their products, usually their bigger seller. Information related to Fancy Doors production for the most recent year follows: The owners have heard of uner 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 five activities as generating indirect costs: production scheduling, material handling, machine setup, assembly, and inspection. Fancy Doors collected the following data related to the indirect cost activities: a. Calculate the cost of an interior door and an exterior door under the existing simple costing system. c. Compare the costs of the doors in requirements 1 and 2. If any, why do the simple and activitybased costing systems differ in the cost of an interior and exterior door? d. Which one of the products do you think might have experienced a declining market share? How might the company use the new cost information from its activity-based costing system to address the declining market share for interior doors

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