Consider the following data for a clinical laboratory:

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

b. Now, using these allocation rates, estimate the total cost of performing each test.

c. Verify that the total annual costs aggregated from individual test costs equal the total annual costs of the laboratory given in the table above.

Transcribed Image Text:

Activity Data Activity Annual Costs Receive specimen $ 10,000 Cost Driver Number of tests Test A Test B Test C Test D 2,000 1,500 1,000 500 Set up equipment 25,000 Number of minutes per test 5 5 10 10 Run test 100,000 Number of minutes per test 1 5 10 20 Record results 10,000 Number of minutes per test Transmit results 5,000 Number of minutes per test 23 3 3 +3 23 23 4 Total costs $150,000