Consider the data for a clinical laboratory and then answer questions 4.9a-4.9c.Using ABC techniques, determine the allocation rate for each activity.Now, using this allocation rate, estimate the total cost of performing each test.Verify that the total annual costs aggregated from individual test costs equalthe total annual costs of the laboratory given in the data.b.Activity DataTest A Test B Test C Test D2,000 1,500 1,000 500Cost DriverAnnual CostsActivityReceive specimenSet up equipmentRun testRecord resultsNo. of testsNo. of mins. per testNo. of mins. per testNo. of mins. per testNo. of mins. per test$ 10,00025,000100,00010,000Transmit results5,000Total overhead costs $150,000101020431012223

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Asked May 9, 2019
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How to determine the allocation rate for each activity?

Consider the data for a clinical laboratory and then answer questions 4.9a-4.9c.
Using ABC techniques, determine the allocation rate for each activity.
Now, using this allocation rate, estimate the total cost of performing each test.
Verify that the total annual costs aggregated from individual test costs equal
the total annual costs of the laboratory given in the data.
b.
Activity Data
Test A Test B Test C Test D
2,000 1,500 1,000 500
Cost Driver
Annual Costs
Activity
Receive specimen
Set up equipment
Run test
Record results
No. of tests
No. of mins. per test
No. of mins. per test
No. of mins. per test
No. of mins. per test
$ 10,000
25,000
100,000
10,000
Transmit results5,000
Total overhead costs $150,000
1010
20
4
3
10
1
2
2
2
3
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Consider the data for a clinical laboratory and then answer questions 4.9a-4.9c. Using ABC techniques, determine the allocation rate for each activity. Now, using this allocation rate, estimate the total cost of performing each test. Verify that the total annual costs aggregated from individual test costs equal the total annual costs of the laboratory given in the data. b. Activity Data Test A Test B Test C Test D 2,000 1,500 1,000 500 Cost Driver Annual Costs Activity Receive specimen Set up equipment Run test Record results No. of tests No. of mins. per test No. of mins. per test No. of mins. per test No. of mins. per test $ 10,000 25,000 100,000 10,000 Transmit results5,000 Total overhead costs $150,000 1010 20 4 3 10 1 2 2 2 3

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Activity based costing first traces costs to activities then to the products. Underlying assumption is that the activities consume resources and that product, in turn, consume ac...

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