Reference no: EM133126143

Question - Lassiter Labs performs tests on liquid samples supplied by outside companies to ensure that their waste meets environmental standards. Customers deliver liquid samples to the lab and receive the lab reports via the Internet. The Lassiter Labs facility is built and staffed to handle the processing of 100,000 tests per year. The lab facility cost $160,000 to build and is expected to last 10 years and will have no salvage value. Processing equipment cost $250,000 and has a life expectancy of five years and will have no salvage value. Both facility and equipment are depreciated on a straight-line basis. Lassiter Labs has six salaried laboratory technicians, each of whom is paid $30,000. In addition to the salaries, facility, and equipment, Lassiter Labs expects to spend $50,000 for chemicals and other supplies (assuming 100,000 tests are performed). Last year, 86,000 tests were performed.

i. Calculate the total annual activity rate for the Liquid testing activity. Break the activity rate into fixed and variable components.

ii. Compute the total activity availability, and break this into activity output and unused activity.