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Westford Pharmacy, part of a large chain of pharmacies, fills a variety of prescriptions for customers. The complexity of prescriptions filled by Westford varies widely;
Westford Pharmacy, part of a large chain of pharmacies, fills a variety of prescriptions for customers. The complexity of prescriptions filled by Westford 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 Westford 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 Data table Data table Technician Hours Customer Order Number 1247 Customer Order Number 1248 0.5 Number of Prescriptions 4 Pharmacist Hours Cost Pools Total Annual Estimated Cost Cost Driver Total Annual Estimated Cost Driver Activity 1.0 0.5 Pharmacy occupancy costs (utilities, rent, and other costs). $ 75,000 Technician hours....... 75,000 2 1.5 Packaging supplies (bottles, bags, and other packaging).... Print Done Professional training and insurance costs.. Total pharmacy overhead .......... 45,000 Number of prescriptions.. 42,000 Pharmacist hours 25,000 21,000 $ 162,000 Print Done
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