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Question $4(21$ marks; $37\mathrm{.}8$ minutes$)$

Open Doors, Inc. produces two types of doors, interior and exterior. The company's simple costing system has two direct cost categories $($materials and labour$)$ and one indirect cost pool. The simple costing system allocates indirect costs on the basis of machine hours. Recently, the owners of Open Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Open Door production for the most recent year follows:

$\backslash$table$[[,$Interior,Exterior$],[$Unit sold,$3200,1800],[$Selling price,R$125,$R$200],[$Direct material cost per unit,R$30,$R$45],[$Direct manufacturing labour cost per hour,R$16,$R$16],[$Direct manufacturing labour hours per unit,$1\mathrm{.}50,2\mathrm{.}25],[$Production runs,$40,85],[$Materials moves,$72,168],[$Machine setups,$45,155],[$Machine hours,$5500,4500],[$Number of inspections,$250,150]]$

The owners have heard that 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 Open Doors, six activities were identified as generating indirect costs: production scheduling, material handling, machine setup, assembly, inspection, and marketing. Open Doors collected the following data related to the indirect cost activities:

$\backslash$table$[[$Activity$,$Activity Cost,Activity Driver$],[$Production scheduling,R$95000,$Production runs$],[$Material handling,R$45000,$Material moves$],[$Machine setup,R$25000,$Machine setups$],[$Assembly$,$R$60000,$Machine hours$],[$Inspection$,$R$8000,$Number of inspections$]]$

Marketing costs were determined to be $3\%$ of the sales revenue for each type of door.

Required:

$4\mathrm{.}1$ Calculate the cost of each door under the activity$-$based costing system.

$(21)$

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