clinical laboratory activity based accounting 496582

6.7.

Consider the following data for a clinical laboratory:

Activity Data

Activity Annual Costs Cost Driver Test A Test B Test C Test D

Receive specimen $ 10,000 Number of tests 2,000 1,500 1,000 500

Equipment set up 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 2 2 2 4

Transmit results 5,000 Number of minutes 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.