Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, aggregates all operating costs of 1,260,000 into a single overhead cost pool. Orange calculates a rate per test-hour of $14 ($1,260,000 / 90,0000) ( total test-hours). HT uses 50,000 test-hours, and ST uses 40,000 test-hours. Gary , '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 to lose business. divides 's costs into four activity-cost categories.