Plymouth Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Plymouth aggregates all operating costs of $1,200,000 into a single overhead cost pool. Plymouth 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, Plymouth'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 Plymouth to lose business. Savarese divides Plymouth's costs into four activity-cost categories. EB (Click the icon to view the activity-cost categories.) Read the requirements Activity hours per test type Activity rate Cost per activity x Data Table es of a. Direct-labor costs, $105,000. These costs can be directly traced to HT, $75,000, and b. Equipment-related costs (rent, maintenance, energy, and so on), $450,000. These c. Setup costs, $425,000. These costs are allocated to HT and ST on the basis of the ST, $30,000 oul act costs are allocated to HT and ST on the basis of test-hours. number of setup-hours required. HT requires 12,000 setup-hours, and ST requires 5,000 setup-hours eu 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 ty (H Requirements 1750 2500 2400 1500 8150 1. Classify each activity cost as output unit-level, batch-level, product- or 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 $16 per test-hour that Plymouth 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 Plymouth's management use the cost hierarchy and ABC information to better manage its business? ields Print Done