Crane Test Laboratories was founded 25 years ago to evaluate the reaction of materials to extreme increases in temperature. Much of the company's early growth was attributable to government contracts to test the suitability of weapons, transportation equipment, and clothing for use in arid desert regions. Recent growth has come from diversification and expansion into commercial markets. Environmental testing at Crane Test now includes the following: heat testing (HTT) air turbulence testing (ATT) stress testing (SST) arctic condition testing (ACT) aquatic testing (AQT) Currently, all the company's budgeted operating costs are collected in a common overhead pool. All of the estimated testing hours are collected in another common pool. One rate per test hour is used to estimate the cost of all five types of testing. In determining the sales price, this hourly rate is marked up by 50% to cover administrative expenses, taxes, and profit Rick Shaw, Crane Test's operations engineer, believes that there is enough variation in the test procedures and cost structure to establish separate costing and billing rates. After analyzing the following data, he has recommended that new rates be put into effect at the beginning of Crane Test's fiscal year. The budgeted total costs for the coming year are as follows: The budgeted total costs for the coming year are as follows: $ 450,000 66,000 Test pool labor (10 employees)" Supervision Equipment depreciation Heat Electricity 172,000 164,000 130,000 Water 76,000 Setup 60,000 102,000 54,000 Indirect materials Operating supplies Total costs Total estimated test hours $ 1.274,000 100,000 "All employees are paid the same salary. The following chart reports Shaw's analysis of resource usage by test type. HTT ATT SST ACT AQT 3 2 2 1 2 40% 15% 15% 15% 15% $42,800 $22,000 $39,000 $32,000 $36,200 50% 5% 5% 30% 10% Test pool labor employees Supervision Equipment depreciation Heat Electricity Water Setup Indirect materials 30% 10% 10% 40% 10% 60% 20% 20% 20% 15% 30% 15% 20% $16,500 $15,600 $31,200 $20,500 $18,200 10% 10% 25% 20% 35% Operating supplies Test hours Competitors' hourly billing rates 31.500 10,000 25,000 21.000 12,500 $17.50 $19.00 $15.50 $16.00 $20.00 (a) Compute the common pool hourly cost and hourly billing rate for Crane Test Laboratories. (Round answers to 2 decimal places, eg, 15.25.) $ Common pool hourly cost /test hour Hourly billing rate /test hour eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer (b) Compute the activity-based hourly cost for each of the five tests performed by Crane Test Laboratories. (Round answers to 2 decimal places, eg. 15.25.) HTT ATT SST ACT $ $ Cost per hour e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer (c) Calculate the activity-based hourly billing rate for each of the five tests performed by Crane Test Laboratories. (Round answers to 2 decimal places, e.g. 15.25.) HTT ATT SST ACT Hourly billing rate $ e Textbook and Media Save for Later Attempts: 0 of 3 used Submit
