Alternate Problem P13-32 (algo) Precision Laboratories evaluates the reaction of materials to extreme increases in temperature. Much of the company's early growth was attributable to government contracts, but recent growth has come from expansion into commercial markets. (Click the icon to view the current overhead allocation information ) (Click the icon to view the proposed change.) After analyzing the company data, he has divided operating costs into the following three cost pools (Click the icon to view the cost pools.) (Click the icon to view the budgeted information) Read the requirements X More Info Two types of testing at Precision are Heat Testing (HTT) and Arctic-condition Testing (ACT). Currently, all of the budgeted operating costs are collected in a single overhead pool. All of the estimated testing-hours are also collected in a single pool. One rate per test-hour is used for both types of testing. This hourly rate is marked up by 35% to recover administrative costs and taxes and to earn a profit Print Done i More Info lan Logan, Precision's controller, believes that there is enough variation in the test procedures and cost structure to establish separate costing rates and billing rates at a 35% markup. He also believes that the inflexible rate structure the company is currently using is inadequate in today's competitive environment Print Done i Data Table Labor and supervision $ 475,200 484 595 342,900 Setup and facility costs Utilities $ 1,302,695 Total budgeted costs for the period Print Done - i More Info lan Logan budgets 108,000 total test-hours for the coming period. Test-hours is also the cost driver for labor and supervision. The budgeted quantity of cost driver for setup and facility costs is 950 setup hours. The budgeted quantity of cost driver for utilities is 9,000 machine-hours. Ian has estimated that HTT uses 70% of the test-hours, 20% of the setup-hours, and half the machine hours. Print Done i Requirements 1. Find the single rate for operating costs based on test-hours and the hourly billing rate for HTT and ACT 2. Find the three activity-based rates for operating costs 3. What will the billing rate for HTT and ACT be based on the activity-based costing structure? State the rates in terms of test-hours Referring to both requirements 1 and 2, which rates makes more sense for Precision? 4. If Precision's competition all charge $20 per hour for arctic testing, what can Precision do to stay competitive? Print Done