# ACC 550- 6-2 question 1 part 2

.png
Maynard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Maynard aggregates all operating costs of \$1,200,000 into a single overhead cost pool. Maynard calculates a rate per test-hour of \$16 (51,200,000 = 75,000 total test-hours). HT uses 50,000 test-hours, and ST uses 25,000 test-hours. Gary O'Loughlin, Maynard'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 Maynard to lose business. O'Loughlin divides Maynard's costs into four activity-cost categories. B (Click the icon to view the activity-cost categories.) Read the requirements. Direct labor \$ 175,000 \$ 50,000 Equipment 250,000 125,000 Setup 240,000 120,000 Design 150,000 90,000 Total \$ 815,000 \$ 385,000 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 test-hours = HT Cost per test-hour \$ 815,000 - 50,000 = \$ 16.30 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)) Total ST costs = ST test-hours = ST Cost per test-hour \$ 385,000 + 25,000 \$ 1540 per test-hour The cost per test-hour for HT and ST differs from the cost per test-hour using the simple rate because: HT and ST use different amounts of overhead resources. The simple method does not take that into account. HT is allocated a higher proportion of indirect costs because it uses more resources. Indirect costs are subdivided into 4 activity-cost categories to more accurately determine cost drivers of indirect costs. Requirement 3. Explain the accuracy of the product costs calculated using the simple costing system and the ABC system. How might Maynard''s management use tha ract hiararcrhv and AR infarmatinn tn hattar manane ite hiicinace? es Get more help - CSimiIar question}