Holliston Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Holliston aggregates all operating costs of S1,120,000 into a single overhead cost pool. Holliston calculates a rate per test-hour of S14 ($1,120,000/ 80,000 total test-hours). HT uses 54,000 test-hours, and ST uses 26,000 test-hours. Gary Lawler, Holliston's controller, believes that there is enough variation in test procedures and cost structures to establish separate costing and billing rates for HT and ST. The market for test services is becoming competitive. Without this information, any miscosting and mispricing of its services could cause Holliston to lose business. Lawler divides Holliston's costs into four activity-cost categories. (Click the icon to view the activity-cost categories.) i Requirements Read the requirements. Requirement 1. Classify each activity cost as output unit-level, batch-level, product or service-sustaining, or facility-sustaining. Explain each answer. Cost Item Cost-type a. Direct labor b. Equipment-related costs (rent maintenance, energy, etc.) C. Setup costs d. Costs of designing tests 1. Classify each activity cost as output unit-level, batch-level, productor service sustaining, or facility-sustaining. Explain each answer. 2. Calculate the cost per test-hour for HT and ST. Explain briefly the reasons why these numbers differ from the $14 per test-hour that Holliston calculated using its simple costing system. 3. Explain the accuracy of the product costs calculated using the simple costing system and the ABC system. How might Holliston's management use the cost hierarchy and ABC information to better manage its business? i Data Table Print Done a. Direct-labor costs, $294,500. These costs can be directly traced to HT, $229,500, and ST. $65.000. b. Equipment-related costs (rent, maintenance, energy, and so on), $320,000. These costs are allocated to HT and ST on the basis of test-hours. c. Setup costs, $360,000. These costs are allocated to HT and ST on the basis of the number of setup-hours required. HT requires 14,600 setup-hours, and ST requires 3,400 setup-hours. d. Costs of designing tests, $200,000. These costs are allocated to HT and ST on the basis of the time required to design the tests. HT requires 2,500 hours, and ST requires 2,500 hours. Choose from any dmn- Holliston Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Holliston aggregates all operating costs of S1,120,000 into a single overhead cost pool. Holliston calculates a rate per test-hour of S14 ($1,120,000/ 80,000 total test-hours). HT uses 54,000 test-hours, and ST uses 26,000 test-hours. Gary Lawler, Holliston's controller, believes that there is enough variation in test procedures and cost structures to establish separate costing and billing rates for HT and ST. The market for test services is becoming competitive. Without this information, any miscosting and mispricing of its services could cause Holliston to lose business. Lawler divides Holliston's costs into four activity-cost categories. (Click the icon to view the activity-cost categories.) i Requirements Read the requirements. Requirement 1. Classify each activity cost as output unit-level, batch-level, product or service-sustaining, or facility-sustaining. Explain each answer. Cost Item Cost-type a. Direct labor b. Equipment-related costs (rent maintenance, energy, etc.) C. Setup costs d. Costs of designing tests 1. Classify each activity cost as output unit-level, batch-level, productor service sustaining, or facility-sustaining. Explain each answer. 2. Calculate the cost per test-hour for HT and ST. Explain briefly the reasons why these numbers differ from the $14 per test-hour that Holliston calculated using its simple costing system. 3. Explain the accuracy of the product costs calculated using the simple costing system and the ABC system. How might Holliston's management use the cost hierarchy and ABC information to better manage its business? i Data Table Print Done a. Direct-labor costs, $294,500. These costs can be directly traced to HT, $229,500, and ST. $65.000. b. Equipment-related costs (rent, maintenance, energy, and so on), $320,000. These costs are allocated to HT and ST on the basis of test-hours. c. Setup costs, $360,000. These costs are allocated to HT and ST on the basis of the number of setup-hours required. HT requires 14,600 setup-hours, and ST requires 3,400 setup-hours. d. Costs of designing tests, $200,000. These costs are allocated to HT and ST on the basis of the time required to design the tests. HT requires 2,500 hours, and ST requires 2,500 hours. Choose from any dmn