Question
Total HT costs HT test-hours = HT Cost per test-hour $820,000 40,000 = $20.50 per test-hour Part 9 Determine the formula to calculate the ST
| Total HT costs | HT test-hours | = | HT Cost per test-hour | ||
$820,000 | 40,000 | = | $20.50 | per test-hour |
Part 9
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 cent.)
| Total ST costs | ST test-hours | = | ST Cost per test-hour | ||
$370,000 | 30,000 | = | $12.33 | per test-hour |
Part 10
The cost per test-hour for HT and ST differs from the cost per test-hour using the simple rate because:
1.
2.
3.
choices to choice
HT and ST use different amounts of overhead resources. The simple method does not take that into HT and ST use the same amount of overhead resources. ABC costing makes it too complex. 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 One large indirect cost pool is used to determine the cost for each activity. ST is allocated a higher proportion of indirect costs because it uses more resources.
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