Question

HW Score: 53.15%, 5.31 of 10 p E4-23A (similar to) Wolanin Pharmacy, part of a large chain of pharmacies fills a variety of prescriptions for customers. The complexity of prescriptions filed by Wolanin 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 Requirements 1 2 3. Requirement 1. What is the traditional overhead role based on the number of prescretiona? Fraternity the form used to compute the traditional overhead rate, ten compute the rate Round your Traditional What is the traditional overhead rate based on the number of prescriptions? How much pharmacy overhead would be allocated to customer order number 1242 il traditional overhead alocation based on the number of prescription is used? How much my overhead would be allocated to customer order number 1213 vonaloverhead location based on the number of prescription is used What are the flowing coul pollocation rates a. Pharmacy occupancy costs b. Packaging supplies c. Professional aning and insurance costs How much would be alocated to customer order number 1242 it activity based costing (ABC) is used to allocate the pharmacy overhead How much would be allocated to customer order number 1243 i activity based on (ABC) is used to locate the pharmacy Overhead co? 6. Chef

Answer 1

1. Traditional overhead rate= Total manufacturing overhead/ no. of prescriptions= 284000/2000= $$14.2

2.Pharmacy ovrhead allocable to order 1242= No. of prescription*Overhead rate= 4*14.2= $56.8

3. Pharmacy overhead allocable to order 1243= 2*14.2= $28.4

4. Cost pool allocation rates=

• Pharmacy occupant cost(based on pharmacist hours)= 102000/25000= $4.08
• Packaging supplies (based on no. of prescription)= 32000/20000= $1.6
• Professional training and insurance (based on technician hours)= 150000/85000= $1.76