a. Using ABC techniques, determine the allocation rate for each activity.

b. Now, using the allocation rate, estimate the total cost of performing each test.

c. Verify that the total annual costa aggregated from individual test costs equal to the total annual costs of the laboratory given in the data above.

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

Received Spec $10,000 No. of test 2,000 1,500 1,000 500

Set Up Equip $25,000 No.min per test 5 5 10 10

Run Test $100,000 No.min per test 1 5 10 20

Record Results $10,000 No.min per test 2 2 2 4

Transmit Results $5000 No.min per test 3 3 3 3

Total Cost $150,000