Cost Determination

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Cost Determination

Costs are described in several ways. For example, they can be direct or indirect and fixed or variable. Direct costs are directly traceable to a test procedure, such as reagents, controls, and testing personnel. Indirect costs are costs not directly traceable to a test procedure, such as general operating activities, and institutional costs, such as clinical laboratory management, heat, lighting, housekeeping, etc.
Fixed costs do not vary (for a given period) with changes in the test volume, whereas variable costs change proportionally with changes in test volume. The cost of a testing instrument is fixed; reagents, controls, and disposable supplies constitute variable costs.
Table 1 illustrates the various cost categories.

Table 1: Cost Determination
Direct costs – attributed to an individual test
Reagents, personnel performing tests, calibrators, proficiency testing
Indirect costs – not attributed to an individual test
Housekeeping, electrical use, building maintenance, HVAC
Fixed costs – constant and not subject to test volume
Test instrument, accreditation, non-testing personnel, i.e., managers and secretaries
Variable costs – changes based on test volume
Reagents and disposables

Labor for testing may be fixed or variable but is generally considered a fixed cost unless new personnel is hired or overtime is required to perform the testing. For example, if salaried personnel is hired to do the entire laboratory testing during a specific period (i.e., 8-hour day), their contribution to performing that specific test becomes fixed.