Maynard Test Laboratorics does heat testing (HT) and stress tecting (ST) on materials and operates at capacity. Under its current simple costing system, Maynard aggregates all operating costs of $1,330,000 into a single overhead cost pool. Maynard calculats a rate per test hour of S14 ($1,330,000/95,000 total test-hours). HT uses 63.000 test-hours and ST uses 32.000 test-hours. Gary Dalery, Maynard's controller, believes that there is enough variation in test procedures and cost structures to establish separate costing and biling rates for HT and ST. The market for test services is becoming competitive. Without this information, any miscasting and mispricing of its services could cause Maynard to lose business. Daley divides Maynards custs into four activity-cost categories 3 Click the icon to view the activity-cust calegories Read the requirements Requirement 1. Classify cach activity cost as output unit level, batch level, product or service sustaining, or facility sustaining. Explain cach answer. Custom Curltype a. Direct labor Output unit level b. Equipment-related custs (rent, maintenance, energy, etc.) Outpul il-level c. Selup costs Batch-level d. Costs of designing tests Service-sustaining Dutput unit-level costs an costs that can not be traced to Individual services but support the company as a whole Bachevel coste Service sustaining costs are Facilly-sustaining osats ar Requirement 2. Calculate the cost per test-hour for HIT and ST. Explain briefly the reasons why these numbers differ from the $14 per test hour that Maynard calculated using its simple costing system. First, determine the formula used to calculate the cost for each activity in each test type 1 = Cost par activity Calculate the cost of each activity and the total of the heat testing and stress testing Heat Test (IT) Stress Test (SD Total Total Cost Cost Direct labor Equipment Setup Design Total Delemine the formula to calculate the HT cost per fest hour and enter the amounts to calculate the rate (Round the rate to the nearest cent.) HIT Cost per test hour per lest 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 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 cosing system and the ABC system. How might Maynard's management use the cost hierarchy and ABC information to better manage its business? The accuracy of the product costs will be with the ABC system instead of the simple conting system. The ABC product costs wil the utlization of resources by both products Management can use the ABC est to The cost hierarchy enables management to more accurately determine the cost drivers of cust. Choose from any list or enter any number in the input fiets and then continue to the next question x Data Table a. Direct-labor costs, $269,000. These costs can be directly traced to HT, $189,000, and ST, $80,000 b. Equipment-related costs (rent, maintenance, energy, and so on), $475,000. These costs are allocated to HT and ST on the basis of test-hours. c. Setup costs, $385,000. These costs are allocated to HT and ST on the basis of the number of setup-hours required. HT requires 13,000 setup-hours, and ST requires 4,500 setup-hours. d. Costs of designing tests, $248,000. 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 1,500 hours. Print Done