Springfield Test Laboratories does heat testing$($HT$)$ and stress testing$($ST$)$ on materials and operates at capacity. Under its current simple costing$$ system, Springfield aggregates all operating costs of $$1,190,000$ into a single overhead cost pool. Springfield calculates a rate per$$ test$-$hour of $$17($$$1,190,00070,000$ total$$ test$-$hours$).$ HT uses $40,000$test$-$hours, and ST uses $30,000$test$-$hours. Gary Lawler$,$ Springfield$\text{'}$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 Springfield to lose business. Lawler

divides Springfield$\text{'}$s costs into four$$ activity$-$cost categories.

Requirement $1.$ Classify each activity cost as output$$ unit$-$level, batch$-$level,$$ product$-$ or$$ service$-$sustaining, or$$ facility$-$sustaining. Explain each answer.

a$.$ Direct labor

b$.$ Equipment$-$related costs $($rent$,$ maintenance, energy, etc.$)$

c$.$ Setup costs

d$.$ Costs of designing tests

$$

Facility$-$sustaining

Batch$-$level

Service$-$sustaining

Output unit$-$Level