Using the weighted procedure method setting rates, calculate the relative value

Question

Using the weighted procedure method setting rates, calculate the relative value and cost per procedure for the following lab procedures. Assume total lab cost of $1,500,000 and average hourly wage of $16.   

Procedure                              Projected Volumn                       Labor Minutes                                      Supply expense

A                                           4000                                         15                                                        75 cents

B                                           6000                                         13                                                        50 cents

C                                           3000                                         11                                                        50 cents

D                                           5000                                         10                                                        75 cents

E                                           4000                                         12                                                        90 cents

Explanation / Answer

Procedure Cost Weights Lab cost Hours A $ 45,000 0.2483 372,450 23,278.125 B    39,000 0.2152 322,800 20,175 C    16,500 0.0911 136,650 8,540.625 D     37,500 0.2070 310,500 19,406.25 E     43,200 0.2384 357,600 22,350 $ 181,200 1.0000 $ 1,500,000 93,750

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