Consider the following data for a clinical laboratory: Activity Data Activity Annual Costs Cost Driver Test A Test B Test C Test…

Consider the following data for a clinical laboratory:

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Consider the following data for a clinical laboratory: Activity Data Activity Annual Costs Cost Driver Test A Test B Test C Test…
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Activity Data
Activity Annual Costs Cost Driver Test A Test B Test C Test D
Receive specimen $10,000 No. of tests 2,000 1,500 1,000 500
Equipment set-up 25,000 No. of mins. per test 5 5 10 10
Run test 100,000 No. of mins. per test 1 5 10 20
Record results 10,000 No. of mins. per test 2 2 2 4
Transmit results 5,000 No. of mins. per test 3 3 3 3
Total costs $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 costs aggregated from individual test costs equal the
total annual costs of the laboratory given in the table above.

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