Sabor Inc. is a medical testing laboratory that performs several tests and analyses for hospitals in the area. Four of the tests that they perform require the use of a specialized machine that can supply 14,000 hours per year. Information on the four lab tests follows: Test A Test B Test C Test D Charging rate $65 $51 $48 $32 Variable cost $25 $18 $13 $8 Machine hours 3 2 1 0.5 What is the contribution margin per hour of machine time for Test B? a.$33 b.$16.25 c.$18 d.$20.50 e.$16.50

Sabor Inc. is a medical testing laboratory that performs several tests and analyses for hospitals in the area. Four of the tests that they perform require the use of a specialized machine that can supply 14,000 hours per year. Information on the four lab tests follows: Test A Test B Test C Test D Charging rate $65 $51 $48 $32 Variable cost $25 $18 $13 $8 Machine hours 3 2 1 0.5 What is the contribution margin per hour of machine time for Test B? a.$33 b.$16.25 c.$18 d.$20.50 e.$16.50

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 36E

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2. You lab is going to start offering a new procedure. Here is the information you have about the test: Number of procedures performed per year: Equipment cost: Service contract: Expected useful life: Reagent cost: # of minutes to perform test Average wage: Medical supplies/total billable tests Nonmedical supplies/total billable tests Other expenses/total billable tests: 23,500 $105,000 $3500 each year for 7 years 7 years $22,000 per year 20.0 $20.75 per hour $0.28 $0.06 $0.05 Using this information, determine the cost of the test. Explain how you determined this cost. Explain how you arrived at this cost.
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