Question

finish the following requirements given the below information/ I used a snap tool on a computer so please zoom in using ctrl and plus sign to be able to see it

Homework: CH4 Save Score: 0 of 5 pts < 3 of 6 (0 complete) ► HW Score: 0%, 0 of 30 pt E4-23A (similar to) Question Help Werner Pharmacy, part of a large chain of pharmacies, fills a variety of prescriptions for customers. The complexity of prescriptions filled by Werner varies widely: pharmacists can spend between five minutes and six hours on a prescription order. Traditionally, the pharmacy has allocated its overhead based on the number of prescriptions. The pharmacy chain's controller is exploring whether activity-based costing (ABC) may better allocate the pharmacy overhead costs to pharmacy orders. The controller has gathered the following information: BE: (Click the icon to view the expected usage and costs.) The clerk for Werner has gathered the following information regarding two recent pharmacy orders: Click the icon to view the pharmacy order data.) Read the requirements. Requirement 1. What is the traditional overhead rate based on the number of prescriptions? First identify the formula used to compute the traditional overhead rate, then compute the rate. (Round your answer to the nearest cent. Abbreviations used: est. = estimated) - Traditional overhead rate 0 Data Table 0 Data Table - X Requirements - X Total Annual Estimated Cost Customer Order Technician Number of Prescriptions 1. Number Hours Pharmacist Hours 3.0 Cost Driver Driver Activity 0.5 2. 1245 1246 Technician hours ....... 60,000 0.5 1.5 Total Annual Cost Pools Estimated Cost Pharmacy occupancy costs (utilities, rent, and other costs) ..............$ 36,000 Packaging supplies (bottles, bags, and other packaging) .......................$ 26,000 $ Professional training and insurance costs.. 225,000 287,000 Total pharmacy overhead ... Number of prescriptions .. 20,000 Print Done 4. Pharmacist hours ..... What is the traditional overhead rate based on the number of prescriptions? How much pharmacy overhead would be allocated to customer order number 1245 if traditional overhead allocation based on the number of prescriptions is used? How much pharmacy overhead would be allocated to customer order number 1246 if traditional overhead allocation based on the number of prescriptions is used? What are the following cost pool allocation rates: a. Pharmacy occupancy costs b. Packaging supplies c. Professional training and insurance costs How much would be allocated to customer order number 1245 if activity-based costing (ABC) is used to allocate the pharmacy overhead costs? How much would be allocated to customer order number 1246 if activity-based costing (ABC) is used to allocate the pharmacy overhead costs? Which allocation method (traditional or activity-based costing) would produce a more accurate product cost? Explain your answer. 25,000 5. Print Done 6. 7. Print Print Done Done] Choose from any drop-down list and then click Check Answer. 10 parts TU remaining Clear All Check Answer

Answer 1

1. Traditional Overhead rate = $287000/20000 = $14.35 per prescription

2. Overhead allocated to Customer 1245 = 4 x $14.35 = $57.40

3. Overhead allocated to Customer 1246 = 2 x $14.35 = $28.70

4.

Activity	Cost	Cost Driver		Cost per Cost driver
Pharmacy Occupancy Costs	$         36,000	60000	Techinician hours	$              0.60	per technician hour
Packaging Supplies	$         26,000	20000	Prescriptions	$              1.30	per prescription
Professional Training	$       225,000	25000	Pharmacist hours	$              9.00	per pharmacist hour
Total	$       287,000

5. & 6.

	1245	1246
Overhead allocated
Pharmacy Occupancy Costs	$              0.30	$              0.30
Packaging Supplies	$              5.20	$              2.60
Professional Training	$            27.00	$            13.50
Total Overhead	$            32.50	$            16.40

7. Activity Based costing will give more accurate product cost, since it identifies different costs associated with different cost drivers and accordingly allocated overhead to the job as per quantity of cost driver for that particular job