Question

CHAPTER 7: SERVICE LINE COSTING AND PRICING, Homework 3.2, Chapter 7

Allied Laboratories is combining some of its most commom tests into a bundled, one-price package called TEST X that contains three tests (A, B, and C) with the variable costs as stated below. When the tests are combined, only one syringe, form, and sterile bandage will be used. Furthermore, only one charge for breakage/losses will apply. Two blood vials are required, and reagent costs will remain the same (reagents from all three tests are requried).

DATA:
	A	B	C
Syringe	$4.00	$4.00	$4.00
Blood Vial	1.00	1.00	1.00
Forms	0.25	0.25	0.25
reagents	1.00	0.80	1.50
Bandage	0.20	0.20	0.20
Breakage/loss	0.10	0.10	0.10

Using the above information, complete the following table and answer the questions below:

Supplies	A	B	C	# Supplies needed for TEST X	Combined supply costs for TEST X
Syringe
Blood Vial
Forms
reagents
Bandage
Breakage/loss

a. What is the price of the combined test?

b. What price is needed to obtain a $10 contribution margin?

Answer 1

A)

TABLE SHOWING CALCULATION OF PRICE OF TEST X

Supplies	A	B	C	Supplies needed for TEST X	Combined supply costs for TEST X
Syringe				1	$4
Blood Vial				2	$2
Forms				1	$0.25
Reagents	$1	$0.8	$1.5	3	$3.3
Bandage				1	$0.2
Breakage/loss				1	$0.1
Total					$9.85

Price of the combined test is $9.85

b) If the contribution of $10 is needed, the new price will be $19.85