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 $1,330,000 into a single overhead cost pool. Plymouth calculates a rate per test-hour of $14 ($1,330,000 + 95,000 total test-hours). HT uses 63,000 test-hours, and ST uses 32,000 test-hours. Gary Gaffney, 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. Gaffney divides Plymouth's costs into four activity-cost categories. (Click the icon to view the activity-cost categories.) Read the requirements. Facility-sustaining costs are costs that can not be traced to individual services but support the company as a whole. Requirement 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 Plymouth calculated using its simple costing system. First, determine the formula used to calculate the cost for each activity in each test type. Activity rate Activity hours per test type = Cost per activity Calculate the cost of each activity and the total cost of the heat testing and stress testing. Heat Test (HT) Total Cost Direct labor Equipment Setup Design Total a. b. C. Direct-labor costs, $269,000. These costs can be directly traced to HT, $189,000, and ST, $80,000. 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. 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. Costs of designing tests, $248,000. These costs are allocated to HT and ST on the basis of the time required for designing the tests. HT requires 2,500 hours, and ST requires 1,500 hours. d