Question Help E5-19 (similar to) Holiston Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity Under its current simple costing system, Holliston aggregates all operating costs of $1,360,000 into a single overhead cost pool. Holliston calculates a rate per test-hour of $16 ($1,360,000/85,000 total test-hours). HT uses 55,000 test-hours, and ST costing and billing or test services is becoming competitive. Without this information, any miscosting and mispricing of its services could cause Hoiliston to lose business Gary Savarese, s controller, believes that there is enough variation in test uses 30,000 to establish and cost rates for HT and ST. The dividos costs into four activity-cost categories. categories.) (Click the icon to view the batch-level, Cost Item Cost-type Direct labor c. Setup costs ost categories.) Data Table CO a. Direct-labor costs, $338,000. These costs can be directly traced to HT, $275,000, and ST, $63,000. b. Equipment-related costs (rent, maintenance, energy, and so on), $340,000. These costs are allocated to HT and ST on the basis of test-hours. te c. Setup costs, $357,000. 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 4,000 setup-hours d. Costs of designing tests, $283,500. These costs are allocated to HT and ST on the basis of the time required to design the tests. HT requires 3,000 hours, and ST requires 1,500 hours. th PrintDone Requirements 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 Holliston calculated using ts simple costing system. 3. Explain the accuracy of the product costs calculated using the simple costing nsystem and the ABC system. How might Holliston's management use the cost hierarchy and ABC information to better manage its business