Management

Accounting
Case Submission : Eastside Medical
Testing

By
Section B
Surjit S K
Vimal Kumar R
Vinoth Kumar
R
Vivek Agarwal
Viswanathan E
Saikat Roy

1401111
1401113
1401114
1401115
1401116
1401117

Question 1
Based on Emmets assumptions - Cost and Profit per unit
Number of tests per
year
Number of runs
Price per test
Less:
Material cost
Direct labor @
$18/hr.
Overhead
allocation:
Setup labor
Equipment
Rent
Billing
Clerical
Other
Total cost
Profit per test
Total profit
Total overhead

T1

T2

T3

T4

T5

Total

3,500

52,000

72,000

80,000

92,000

299,500

350

520

800

920

3,310

35.0000

26.0000

720
22.000
0

21.0000

20.0000

12.0000

10.5000

7.5000

7.3500

5.8500

1.5000

1.0000

1.1000

1.1000

1.1000

27.9686
6.7987
1.3022
0.7846
0.5342
0.6678

2.7969
4.5325
1.3022
0.7846
0.5342
0.6678

2.7969
4.9857
1.3022
0.7846
0.5342
0.6678

2.7969
4.9857
1.3022
0.7846
0.5342
0.6678

51.5561

22.1181

2.7969
4.9857
1.3022
0.7846
0.5342
0.6678
19.671
4

19.5214

18.0214

(16.556
1)
(57,946
.37)

3.8819

2.3286

1.4786

1.9786

201,856
.40

167,65
9.66

118,288
.51

182,031.
79

611,890.
00

133,196
.37

552,143
.60

797,14
0.34

885,711
.49

1,018,56
8.21

3,386,76
0.00

Question 2
Should Emmet lower the price?

From the above findings it is advised that Emmet should not reduce the price of test
but should rather explore the possibility of increasing the same as the organization
is actually losing money due to lower volume of testing. Thus Eastside would be
able to retain a valuable customer. Also, being one of the only providers of T1 tests,
Eastside will then dominate a growing market of T1 tests thus making it a leader in
this high-profit product.

Question 3
Effect on the annual profit of the company if Nuclear systems business is lost
If the company loses its business, i.e. T1 tests decrease by $1,750 and it will have a
huge impact on the profit. Profit will decrease because of poor revenues
Number of tests per
year
Number of runs
Price per test
Less:
Material cost
Direct labor @
$18/hr.
Overhead allocation:
Setup labor
Equipment
Rent
Billing
Clerical
Other
Total cost
Profit per test
Total profit
Total overhead

T1

T2

T3

T4

T5

Total

1,750

52,000

72,000

80,000

92,000

297,750

350
35.0000

520
26.0000

720
22.0000

800
21.0000

920
20.0000

3,310

12.0000

10.5000

7.5000

7.3500

5.8500

1.5000

1.0000

1.1000

1.1000

1.1000

55.9372
6.8540
1.3098
0.7893
0.5374
0.6717

2.7969
4.5693
1.3098
0.7893
0.5374
0.6717

2.7969
5.0262
1.3098
0.7893
0.5374
0.6717

2.7969
5.0262
1.3098
0.7893
0.5374
0.6717

2.7969
5.0262
1.3098
0.7893
0.5374
0.6717

79.5993
(44.5993
)
(78,048.
71)
115,673.
71

22.1743

19.7312

19.5812

18.0812

3.8257

2.2688

1.4188

1.9188

198,935.
97
555,064.
03

163,350.
81
801,449.
19

113,500.
90
890,499.
10

176,526.0
3
1,024,073
.97

574,265.0
0
3,386,760
.00

Thank You!