Hopkinton Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Hopkinton aggregates all operating costs of $1,200,000 into a single overhead cost pool. Hopkinton calculates a rate per test-hour of $16 ($1,200,000/75,000 total test-hours). HT uses 50,000 test-hours, and ST uses 25,000 test-hours. Gary O'Loughlin, Hopkinton'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 Hopkinton to lose business. O'Loughlin divides Hopkinton's costs into four activity-cost categories. (Click the icon to view the activity-cost categories.) 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 Output unit-level costs are Batch-level costs are Servico-sustaining costs are Facility-sustaining costs are Choose from any list or enter any number in the input fields and then continue to the next question. The overhon rates under the new activ Read the requirements. First, determine the formula used to calculate the cost for each activity in each test type. Cost per activity Total Calculate the cost of each activity and the total cost of the heat testing and stress testing. Heat Test (HT) Stress Test (ST) Total Cost Direct labor Equipment Setup Design Total Choose from any list or enter any number in the input fields and then continue to the next question Determine the formula to calculate the HT cost per test-hour and enter the amounts to calculate the rate. (Round the rate to the nearest cent.) - HT Cost per test-hour per test-hour Determine the formula to calculate the ST cost per test-hour and enter the amounts to calculate the rate (Round the rate to the nearest cent.) ST Cost per test-hour per test-hour Hopkinton Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Hopkinton aggregates all operating costs of $1,200,000 into a single overhead cost pool Hopkinton calculates a rate per test-hour of $16 ($1,200,000/75,000 total test-hours). HT uses 50,000 test-hours, and ST uses 25,000 test-hours. Gary O'Loughlin, Hopkinton'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 Hopkinton to lose business. O'Loughlin divides Hopkinton's costs into four activity-cost categories 2 (Click the icon to view the activity-cost categories) Read the requirements The cost per test-hour for HT and ST differs from the cost per test-hour using the simple rate because: Requirement 3. Explain the accuracy of the product costs calculated using the simple costing system and the ABC system. How might Hopkinton's management use the cost hierarchy and ABC Information to better manage its business? The accuracy of the product costs will be the utilization of with the ABC system instead of the simple costing system. The ABC product costs will resources by both products. Management can use the ADC costs to accurately determine the cost drivers of The cost hierarchy enables management to more Choose from any list or enter any number in the notes 5 OT 5 U comple) HP 7: 1 pt Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple cos inton aggregates all operating costs of $1,200,000 into a single overhead cost pool. Hopkinton calculates a rate per test-hour of 75,000 total test-hours). HT uses 50,000 test-hours, and ST uses 25,000 test-hours. Gary O'Loughlin, Hopkinton's controller, bel nough variation in test procedures and cost structures to establish separate costing and billing rates for HT and ST. The market apoming competitive Without the information anw.micosting andmisericida ofite candes could cause Hankinton to lose busine! vides Hop e icon to v i Data Table quirements er test-hour a. Direct-labor costs, $105,000. These costs can be directly traced to HT, $75,000, and ST, $30,000 b. Equipment-related costs (rent, maintenance, energy, and so on), $450,000. These costs are allocated to HT and ST on the basis of test-hours. c. Setup costs, $425,000. These costs are allocated to HT and ST on the basis of the number of setup-hours required. HT requires 12,000 setup-hours, and ST requires 5,000 setup-hours. d. Costs of designing tests, $270,000. 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 2.000 hours. ment 3. Explai ment use the Jow might Hopkintor uracy of the pro pduct costs will Print Done ement can use t ately determine the cost drivers of management to more costs se from any list or enter any number in the input fields and then continet