50.1K

Verified Solution

Link Copied!

pls show your steps

DO/1/2135 PM = Homework: Chapter 5 Homework (New) Question 1, E5-10 (simie... HW Beer 6.77% 0.26 of points Puto 13 Points: 0.26 of 1 Save Vineyard Testlaborones constig) and restesing on meile operis capacity. Under its currently word opregte operating costs.0.000 euros overhead compouliwyd calculate arate per fest hour of St $300,000 15.000.000 and 30,000 hour awy o Vnews cher enough von inte procedures and constructors to the costing and digestort and the market for is becoming comp WoWomatining and te service could cause Vineyard to lose business Mahoney de Vineyards us to four ty.com cores Click on to view the cry.com ategories Read the recents trach haver coets are relate to a group of units or o service. They are not perawo or un Service ang cools are cold to support individual services regardess of the number of units of bacted Facy sustaining costs ar costs cannot be traced to individual services but support the concury as a whole Requirement 2. Calculate the cost porest hour for HT and ST Explain by way these numbers from $16 hora Vineyard danger Fototermine the formula se tocate the cost for each activity in each tout type Aaviyat Activity Bours per testtype Cooperacy Culate the cost of each activity and the total cost of the threat testing and stress touting Hoat Test (H1). Data Table Total Cos! a Director coul, 339,000. These costante directly to HT 3275.000 and ST 563.000 Director 5000 Equipment related costs front maintenance, energy, and so on 5340.000 Thase Equipment costs located to HT and ST on the basis oftest hours Setup Setup col 5357.000 The costs are located to ST on the bows of number of cop hours round. True 13.000 sephoon, and STR Design 4,000 sup hours d Costs of signing tests, 283.500. These costs are located to Hands Total basis of the required for designing the Tree 3.000 hours and ST Yes 1500 hours Help Me Solve This e Text Pages Get More Help 2:10 PM Vineyard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system Vineyard aggregates all operating costs of $1,360,000 into a single overhead cost pool. Vineyard calculates a rate per test-hour of $16 ($1,360,000 + 85,000 total test-hours). HT uses 55,000 test-hours, and ST uses 30,000 test-hours. Gary Mahoney, Vineyard'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 Vineyard to lose business. Mahoney divides Vineyard's costs into four activity-cost categories. (Click the icon to view the activity cost categories.) Read the requirements *** costs that can not be traced to individual services but support the company as a whole. 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 Vineyard calculated using its simple costing system. First, determine the formula used to calculate the cost for each activity in each test type. Activity rate Activity hours per test type Cost per activity x 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 Get More Heln a. b. c. Direct-labor costs, $338,000. These costs can be directly traced to HT, $275,000, and ST, $63,000. Equipment-related costs (rent, maintenance, energy, and so on), $340,000. These costs are allocated to HT and ST on the basis of test-hours. Setup costs, $357,000. These costs are allocated to HT and ST on the basis of the number of setup-hours required. HT requires 13,000 setup-hours, and ST requires 4,000 setup-hours. Costs of designing tests, $283,500. These costs are allocated to HT and ST on the basis of the time required for designing the tests. HT requires 3,000 hours, and ST requires 1,500 hours. d. X Requirements 1. 2. Classify each activity cost as output unit-level, batch-level, product-or service-sustaining, or facility-sustaining. Explain each answer. 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 Vineyard calculated using its simple costing system. Explain the accuracy of the product costs calculated using the simple costing system and the ABC system. How might Vineyard's management use the cost hierarchy and ABC information to better manage its business? 3. Print Done

Answer & Explanation Solved by verified expert

See Answer