Question
Maynard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Maynard
Maynard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Maynard aggregates all operating costs of $1,200,000 into a single overhead cost pool. Maynard 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 Savarese, Maynard'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 Maynard to lose business. Savarese divides Maynard's costs into four activity-cost categories (Cick 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 a. Direct labor Cost Item b. Equipment-related costs (rent, maintenance, energy, etc.) c. Setup costs d. Costs of designing tests Cost-type
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