Marc Goudreau, administrator of Clearwater Hospital, was puzzled by the prior month's reports. "Every month, it's anyone's guess whether the lab will show a profit or a loss. Perhaps the only answer is to increase our lab fees again. "We can't, replied Rhoda Groves, the controller. There are still a lot of complaints about the last increase, particularly from the insurance companies and government health units. They're now paying only about 83% of what we bill. I'm beginning to think the problem is on the cost side. To determine if the Clearwater lab costs are in line with those of other hospital labs, Goudreau has asked you to evaluate the costs for the past month. Groves has provided you with the following information a. Two basic types of tests are performed in the lab-smears and blood tests. During the past month, 2,400 smears and 660 blood tests were performed in the lab b. Small glass plates are used in both types of tests. During the past month, the hospital purchased 26,000 plates at a cost of S62.400 This cost is net of a 4% purchase discount. A total of 1,000 of these plates were unused at the end of the month, no plates were on hand at the beginning of the month c. During the past month, 1,400 hours of labour time were used in performing smears and blood tests. The cost of this labour time was $14,700.00 d. The lab's variable overhead cost last month totalled $6,145 e. Fixed overhead cost last month totalled $9,000 Clearwater Hospital has never used standard costs By searching industry literature, however, you have determined the following nationwide averages for hospital labs