Math

Consider the following data for a clinical laboratory.

Activity                            Annual Cost                            Cost Driver               Test A  Test B  Test C  Test D

Recieve specimen    $10,000                         Number of Test                    2,000    1,500    1,000   500

Equipment Setup      $25,000                         Num of min per test              5              5           10        10

Run Test                     $100,000                      Num of min per test               1              5            10       20

Record Results         $10,000                        Num of min per test               2              2             2          4

Transmit results        $5,000                          Num of min per test               3               3             3          3

Total Cost                   $150,000

 

A. Using ABC techniques, determine the allocation rate for each activity

B. Now, using this allocation rate, estimate the total cost of performing each test.

C. Verify that the total annual cost aggregated from individual test cost eqial the total annual cost of the laboratory given in the table above.