Plantwide rate = total OH / test hour = 20

a. ABC system
Activity Cost Cost driver HT ST Rate per driver
DL 276000
Equipment 495000 90000 Test hour 50000 40000 5.5
Setup 630000 21000 Setup hour 15000 6000 30.0
Designing tests 399000 6000 Designing time 4000 2000 66.5
Total 1800000

b. Cost allocation

Activity HT ST
DL 204000 72000
Equipment 275000 220000
Setup 450000 180000
Designing tests 266000 133000
Total cost 1195000 605000
Test hour 50000 40000
Cost per test hour 23.9 15.125
cost with simple costing 20