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Wolanin Pharmacy, part of a large chain of pharmacies, fills a variety of prescriptions for customers. The complexity of prescriptions

filled 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.

The controller has gathered the following information:

$($Click the icon to view the expected usage and costs.$)$

The clerk for Wolanin has gathered the following information regarding two recent pharmacy orders:

$($Click the icon to view the pharmacy order data.$)$

Read the reguirements

Requirement $1.$ What is the traditional overhead rate based on the number of prescriptions?

Data table

Requirements

What is the traditional overhead rate based on the number of prescriptions?

How much pharmacy overhead would be allocated to customer order

number $1240$ if traditional overhead allocation based on the number of

prescriptions is used?

How much pharmacy overhead would be allocated to customer order

number $1241$ 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 $1240$

if activity$-$based costing $($ABC$)$ is used to allocate the pharmacy

overhead costs?

How much would be allocated to customer order number $1241$

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.

Data table

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