7.7 Consider the following data for a clinical laboratory: Activity Data Annual Costs Activity Receive specimen $ 10,000 Number of tests Cost Driver Test A Test B Test C Test D 2,000 1,500 1,000 500 - Set up equipment 25,000 Number of minutes per test Number of minutes per test 10,000 Number of minutes per test 5 10 10 Run test Record results Transmit results Total costs 100,000 5 2 224 5,000 Number of minutes per test 3 3 33 $150,000 a. Using ABC techniques, determine the allocation rate for each b. Now, using this allocation rate, estimate the total cost of c. Verify that the total annual costs aggregated from individual test activity performing each test. costs equal the total annual costs of the laboratory given in the table above. Clinic projected the following budget information for 2015: Total FFS Visit Volume Payer Mix: ikea 8.6 Chelsea 90,000 visits Blue Cross 40% Highmark 60% Reimbursement Rates: Blue Cross Highmark $25 per visit $20 per visit Variable Costs Resource Inputs: Labor Supplies 48,000 total hours 100,000 total units Resource Input Prices: Labor Supplies $25.00 per hour $1.50 per unit $500,000 Fixed Costs (overhead, plant, and equipment) a. Construct Chelsea Clinic's operating budget for 2015. b. Discuss how each key budget assumption might result in a budget variance, and name the variance that would be used to examine results associated with each assumption