Great Heart Clinic is a medical service institute that provides various services for its patients. The doctors working for the institute are required to fill out a note in the medical system for each patient treated. The system then generates a unique bill for each patient according to the pricing for the specific service or treatment received. Included in each patient's bill is the applied overhead cost based on direct labor hours. The clinic created the following overhead budget for this year, but the actual overhead was $296,047. Direct labor hours Overhead costs: Indirect material Indirect labor Utilities 10,000 $ 3,500 45,000 6,000 Insurance Property taxes 78,000 30,000 $162,500 Total During this year, the doctors actually charged a total of 12,190 hours as shown below. Doctor A 2,000 Doctor B 1,850 Doctor C 1,960 Doctor D 2,100 Doctor E 2,500 Doctor F 1,780 Total 12,190 The overhead variance is deemed material by the CEO, and he wonders why this variance happened and how to address this variance. The CEO is also considering implementing an activity-based costing (ABC) system. Instructions: 1) Explain whether the clinic should use a job costing system or a process costing system. Justify your answer. 2) Calculate the allocated overhead and comment if it is over or under allocated. Show your calculations. 3) Identify and explain two drawbacks of using predetermined overhead rates to apply overhead. 4) Identify and explain why there is usually a difference between the actual overhead and allocated overhead. 5) Identify and explain the appropriate way of treating this over or under allocated overhead. 6) Describe how an ABC system usually assigns overhead costs