costacctg13_sm_ch05

96 and overcosts stress testing 1273 the reason is

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Unformatted text preview: of hours of test time. 5­4 2. Heat Testing (HT) Total (1) Direct labor costs (given) Equipment­r elated costs $5 per hour * ´ 50,000 hours $5 per hour * ´ 30,000 hours Setup costs † $22 per setup­hour ´ 13,500 setup­hours † $22 per setup­hour ´ 4,000 setup­hours Costs of designing tests $60 per hour ** ´ 2,800 hours $60 per hour ** ´ 1,400 hours Total costs $183,000 250,000 Per Hour (2) = (1) ¸ 50,000 $ 3.66 5.00 150,000 297,000 5.94 88,000 168,000 $898,000 3.36 $17.96 84,000 $382,000 2.80 $12.73 2.93 5.00 Stress Testing (ST) Total (3) $ 60,000 Per Hour (4) = (3) ¸ 30,000 $ 2.00 *$400,000 ¸ (50,000 + 30,000) hours = $5 per test­hour † $385,000 ¸ (13,500 + 4,000) setup hours = $22 per setup­hour **$252,000 ¸ (2,800 + 1,400) hours = $60 per hour At a cost per test­hour of $16, the simple costing system undercosts heat testing ($17.96) and overcosts stress testing ($12.73). The reason is that heat testing uses direct labor, setup, and design resources per hour more intensively th...
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