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 comma 200 comma 000 into a single overhead cost pool. Milton calculates a rate per test-hour of $ 16 ($ 1 comma 200 comma 000 / 75 comma 000 total test-hours). HT uses 50 comma 000 test-hours, and ST uses 25 comma 000 test-hours. Gary Cook, 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. Cook divides Milton's costs into four activity-cost categories.

Data Table a.Direct-labor costs, $ 105 comma 000. These costs can be directly traced to HT, $ 75 comma 000, and ST, $ 30 comma 000. b.Equipment-related costs (rent, maintenance, energy, and so on), $ 450 comma 000. These costs are allocated to HT and ST on the basis of test-hours. c.Setup costs, $ 425 comma 000. These costs are allocated to HT and ST on the basis of the number of setup-hours required. HT requires 12 comma 000 setup-hours, and ST requires 5 comma 000 setup-hours. d.Costs of designing tests, $ 270 comma 000. These costs are allocated to HT and ST on the basis of the time required to design the tests. HT requires 2 comma 500 hours, and ST requires 2 comma 000 hours.

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 $ 16 per test-hour that Milton 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 Milton's management use the cost hierarchy and ABC information to better manage its business?

plz use computer writing, not hand writing

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 Output unit-level costs are Batch-level costs are Service-sustaining costs are Facility-sustaining costs are Requirement 2. Calculate the cost per test-hour for HT and ST. Explain briefly the reasons why these numbers differ from the $16 per test-hour that Milton calculated using its simple costing system. First, determine the formula used to calculate the cost for each activity in each 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 Equipment Setup 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.) 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 Milton'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 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