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Part 1 You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenues (10,000 visits).......... $400,000 Wages and benefits................. $220,000 Rent ........................................... 5,000 Depreciation............................... 30,000 Utilities......................................... 2,500 Medical supplies...........................50,000 Administrative supplies................10,000 Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 30 percent rate. a. Construct the clinic’s projected P&L statement. b. What number of visits is required to break even? c. What number of visits is required to provide you with an after-tax profit of $100,000? Part 2 Consider the following data for a clinical laboratory: 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 1. Using ABC techniques, determine the allocation rate for each activity. 2. Now, using this allocation rate, estimate the total cost of performing each test 3. Verify that the total annual costs aggregated from individual test costs equal the total annual costs of the laboratory given in the table above.

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