Vineyard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Vineyard aggregates all operating costs of $ 1 comma 190 comma 000 into a single overhead cost pool. Vineyard calculates a rate per test-hour of $ 17 ($ 1 comma 190 comma 000 / 70 comma 000 total test-hours). HT uses 40 comma 000 test-hours, and ST uses 30 comma 000 test-hours. Gary Maloney, Vineyard'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 Vineyard to lose business. Maloney divides Vineyard's costs into four activity-cost categories.

Vineyard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Vineyard aggregates all operating costs of $1,190,000 into a single overhead cost pool. Vineyard calculates a rate per test-hour of $17 ($1,190,000 / 70,000 total test-hours). HT uses 40,000 test-hours, and ST uses 30,000 test-hours. Gary Maloney, Vineyard'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 Vineyard to lose business. Maloney divides Vineyard's costs into four activity-cost categories. (Click the icon to view the activity-cost categories.) Read the requirements. Data Table e the Requirements ecal 1. Classify each activity cost as output unit-level, batch-level, productor 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 $17 per test-hour that Vineyard calculated using its simple costing system. 3. Explain the accuracy of the product costs calculated using the simple costing system and the ABC system. How might Vineyard's management use the cost hierarchy and ABC information to better manage its business? a. Direct-labor costs, $126,000. These costs can be directly traced to HT, $90,000, and ST, $36,000. b. Equipment-related costs (rent, maintenance, energy, and so on), $350,000. These costs are allocated to HT and ST on the basis of test-hours. C. Setup costs, $430,000. These costs are allocated to HT and ST on the basis of the number of setup-hours required. HT requires 13,600 setup-hours, and ST requires 3,600 setup-hours. d. Costs of designing tests, $264,000. 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 1,400 hours. syst r manage le cd bducts. Print Done Print Done Vineyard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Vineyard aggregates all operating costs of $1,190,000 into a single overhead cost pool. Vineyard calculates a rate per test-hour of $17 ($1,190,000 / 70,000 total test-hours). HT uses 40,000 test-hours, and ST uses 30,000 test-hours. Gary Maloney, Vineyard'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 Vineyard to lose business. Maloney divides Vineyard's costs into four activity-cost categories. Click the icon to view the activity-cost categories.) Read the requirements. First, determine the formula used to calculate the cost for each activity in each test type. 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) Stress Test (ST) Total Total Cost Cost Direct labor 900001 2.25 Equipment 200000 5 Setup 350000 Design Total 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 cent.) Total HT costs HT Cost per test-hour 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 cent.) = ST Cost per test-hour per test-hour The cost per test-hour for HT and ST differs from the cost per test-hour using the simple rate because: Requirement 3. Explain the accuracy of the product costs calculated using the simple costing system and the ABC system. How might Vineyard's management use the cost hierarchy and ABC information to better manage its business? The accuracy of the product costs will be with the ABC system instead of the simple costing system. The ABC product costs will the utilization of V resources by both products. Management can use the ABC costs to The cost hierarchy enables management to more accurately determine the cost drivers of costs. Choose from any list or enter any number in the input fields and then continue to the next