Hull Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Hull aggregates all operating costs of $1,190,000 into a single overhead cost pool. Hull calculates a rate per test of $17 SI 190000170 000 tota est hours. T uses test-hours, and ST uses 30,000 test-hours. Gary Sarsfield, Hull'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 Hull to lose business. Sarsfield divides Hull's costs into four activity-cost categories. EEB Click the icon to view the activity-cost categories.) Read the requirements Activity hours per test type x Activity rate Cost per activity Calculate the cost of each activity and the total cost of the heat testing and stress testing. Heat Test (HT) Total Cost Direct labor Equipment Setup Design Total Enter any number in the edit fields and then click Check Answer. Data Table a. Direct-labor costs, $126,000. These costs can be directly traced to HT, $90,000, and b. Equipment-related costs (rent, maintenance, energy, and so on), $350,000. These c. Setup costs, $430,000. These costs are allocated to HT and ST on the basis of the ra ST, $36,000 to ne costs are allocated to HT and ST on the basis of test-hours number of setup-hours required. HT requires 13,600 setup-hours, and ST requires 3,600 setup-hours. a u 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 ac Te Requirements 1. Classify each activity cost as output unit-level, batch-level, product- or 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 Hull 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 Hull's management use the cost hierarchy and ABC information to better manage its business? Done Print