Question
HalifaxHalifax Test Laboratories does heat testing (HT) and stress testing (ST) on materials. Under its current costing system, HalifaxHalifax aggregates all operating costs of $
HalifaxHalifax
Test Laboratories does heat testing (HT) and stress testing (ST) on materials. Under its current costing system,
HalifaxHalifax
aggregates all operating costs of
$ 1 comma 440 comma 000$1,440,000
into a single overhead cost pool.
HalifaxHalifax
calculates a rate per test-hour of
$ 18$18
($ 1 comma 440 comma 000$1,440,000
/
80 comma 00080,000
total test-hours). HT uses
50 comma 00050,000
test-hours, and ST uses
30 comma 00030,000
test-hours. Gary
CelesteCeleste ,
HalifaxHalifax 's
controller, believes that there is enough variation in test procedures and cost structures to establish separate costing and billing rates. The market for test services is very competitive and without this information, any miscosting and mispricing could cause
HalifaxHalifax
to lose business.
CelesteCeleste
breaks down
HalifaxHalifax 's
costs into four activity-cost categories.
1. | Direct-labour costs, $ 288 comma 000$288,000. These costs can be directly traced to HT,$ 216 comma 000$216,000 , and ST,$ 72 comma 000$72,000. | ||||||
2. | Equipment-related costs (rent, maintenance, energy, and so on), $ 480 comma 000$480,000. These costs are allocated to HT and ST on the basis of test-hours. | ||||||
3. | Setup costs, $ 420 comma 000$420,000. These costs are allocated to HT and ST based on the number of setup-hours required. HT requires13 comma 50013,500 setup-hours, and ST requires4 comma 0004,000 setup-hours. | ||||||
4. | Costs of designing tests, $ 252 comma 000$252,000. These costs are allocated to HT and ST based on the time required to design the tests. HT requires2 comma 8002,800 hours, and ST requires1 comma 4001,400 hours.
Requirements
|
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