ACCT4210 - Cost and Managerial Accounting - Section 004 Question 1, E5-19 (simila... Part 1 of 13 HW Score: 0%, 0 of 5 points Polnts: 0 of 1 Save Ayer Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Ayer aggregates all operating costs of $1,200,000 into a single overhead cost pool. Ayer 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 O'Loughlin, Ayer'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 Ayer to lose business. O'Loughlin divides Ayer's costs into four activity-cost categories. B (Click the icon to view the activity-cost categories.) Read the requirements. Requirement 1. Classify each activity cost as output unit-level, batch-level, product or service-sustaining, or facility-sustaining. Explain each answer. Cost Item Cost-type a. Direct labor b. Equipment-related costs (rent, maintenance, energy, etc.) c. Setup costs d. Costs of designing tests