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Question Help Post Test 11.3 Milton Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Milton aggregates all operating costs of 1,200,000 into a single overhead cost pool. Milton 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 Sarsfield, Milton'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 Milton to lose business. Sarsfield divides Milton's costs into four activity-cost categories (Click the icon to view the activity-cost categories.) Read the requirements, 300,000 Equipment Setup 300,000 150,000 150,000 125,000 120,000 Design Data Table Total 825,000 425,000 E Determine the formula to calculate the HT cost per test-hour and enter the amounts to calculate the rate. (Round the rate to the nearest penny.) Total HT costs HT test-hours HT cost per test-hour 825.000 50.000 16.50 per test-hour Determine the formula to calculate the ST cost per test-hour and enter the amounts to calculate the rate. (Round the rate to the nearest penny.) 1ST test-hours ST cost per test-hour 425,000 1 25.000 17.00 per test-hour Total ST costs a. Direct-labour costs, 105,000. These costs can be directly traced to HT, 75,000, and ST, 30,000 b. Equipment-related costs (rent, maintenance, energy, and so on), 450.000. These costs are allocated to HT and ST on the basis of test-hours. c. Setup costs, 425,000. These costs are allocated to HT and ST on the basis of the number of sclup hours required. HT requires 12,000 sclup-hours, and ST requires 5,000 setup-hours. 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 The cost per test-hour for HT and ST differs from the cost per test-hour using the simple rate because: Print Done HT and ST use different amounts of overhead resources. The simple method does not take that into account HT and ST use the same amount of overhead resources. ABC costing makes it too complex C HT is allocated a higher proportion of Indirect costs because it uses more resources. Indirect costs are subdivided into 4 activity-cost categories to more accurately determine cost drivers of Indirect costs. One large indirect cost pool is used to determine the cost for each activity. 4 ST is allocated a higher proportion of indirect costs because it uses more resources. ? All Check