should the examnmauu each examination, how 7.7 Consider the following data for a
ID: 2617098 • Letter: S
Question
should the examnmauu each examination, how 7.7 Consider the following data for a clinical laboratory: Activity Data Annual Costs Test A Test B Test C Test D Cost Driver Activity Receive specimen Set up equipment Run test Record results 2,000 1,500 1,000 500 5 5 10 10 $ 10,000 Number of tests 25,000 Number of minutes per test 100,000 Number of minutes per test5 10 20 10,000 Number of minutes per test 2 22 4 5,000 Transmit results Number of minutes per test 3 3 Total costs $150,000 a. Using ABC techniques, determine the allocation rate for each activity performing each test. costs equal the total annual costs of the laboratory given in the b. Now, using this allocation rate, estimate the total cost of c. Verify that the total annual costs aggregated from individual test table above.Explanation / Answer
a. Allocation Rate = Annual Costs of particular activity / Cost Driver applicable to an activity
Therefore allocation rate for
Receive Specimen = $10000 / 5000 = $2 / Test
Set up equipment = $25000 / 30 = $833.33 per minute per test
Run Test = $ 100000 / 36 = $2777.78 per minute per test
Record Results = $10000 / 10 = $1000 per minute per test
Transmit Results = $5000 / 12 = $416.67 per minute per test
b. Total cost of performing each test (Amount in $)
4000
(2000 * 2)
3000
(1500*2)
2000
(1000*2)
1000
(500*2)
4166.67
(833.33 * 5)
4166.67
(833.33 * 5)
8333.3
(833.33 * 10)
8333.3
(833.33*10)
2777.78
(2777.78 * 1)
13888.89
(2777.78 * 5)
27777.8
(2777.78 * 10)
55555.6
(2777.78 * 20)
2000
(1000 * 2)
2000
(1000*2)
2000
(1000*2)
4000
(1000*4)
1250
(416.67 * 3)
1250
(416.67*3)
1250
(416.67 * 3)
1250
(416.67 * 3)
c. Total Annual Cost aggregated from Individual Test
Annual Cost = Cost of Test A + Test B + Test C + Test D
= $14194.45 + $24305.56 + $41361.1 + $70138.9
= $150000
Therefore annual cost aggregated from individual test equal the total annual laboratory cost as given.
Activity Test A Test B Test C Test D Receive Specimen4000
(2000 * 2)
3000
(1500*2)
2000
(1000*2)
1000
(500*2)
Set up Equipment4166.67
(833.33 * 5)
4166.67
(833.33 * 5)
8333.3
(833.33 * 10)
8333.3
(833.33*10)
Run Test2777.78
(2777.78 * 1)
13888.89
(2777.78 * 5)
27777.8
(2777.78 * 10)
55555.6
(2777.78 * 20)
Record results2000
(1000 * 2)
2000
(1000*2)
2000
(1000*2)
4000
(1000*4)
Transmit Results1250
(416.67 * 3)
1250
(416.67*3)
1250
(416.67 * 3)
1250
(416.67 * 3)
Total Cost 14194.45 24305.56 41361.1 70138.9Related Questions
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