Wilke Pharmacy, part of a large chain of pharmacies, fills a variety of prescriptions for customers. The complexity of prescriptions filled by Wilke varies widely, pharmacists can spend between five minutes and six hours on a prescription order. Traditionally, the pharmacy has allocated ils 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 Wilke 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 Wilke Pharmacy, part of a large chain of pharmacies, fills a variety of prescriptions for customers. The complexity of prescriptions filled by Wilke 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 Wilke has gathered the following information regarding two recent pharmacy orders: (Click the icon to view the pharmacy order data.) Read the requirements, Data Table Requirement 1. What is the traditional overhead First identify the formula used to compute the tra Total Annual Estimated Cost Driver Activity 60,000 Total Annual Cost Pools Estimated Cost Cost Driver Pharmacy occupancy costs (utilities, rent, and other costs) 24.000 Technician hours........ ....................... $ Packaging supplies (bottles, bags, and other packaging).............................. 20,000 Number of prescriptions .. $ Professional training and Insurance costs 147,000 Pharmacist hours... $ 191,000 Total pharmacy overhead 20,000 21,000 Print Done Wilke Pharmacy, part of a large chain of pharmacies, fills a variety of prescriptions for customers. The complexity of prescriptions filled by Wilke 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 Wilke 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 armeritone First identify the formula used to compute the traditional overhead rate. Data Table Technician Hours 0.5 Number of Prescriptions 4 Pharmacist Hours 1.0 2.5 Customer Order Number 1247 Customer Order Number 1248 0.5 2 Print Done Wilke Pharmacy, part of a large chain of pharmacies, fills a variety of prescriptions for customers. The complexity of prescriptions filled by Wilke varies widely, pharmacists can spend between five minutes and six hours on a prescription order. Traditionally, the pharmacy has allocated its overhead based on controller is exploring whether activity-based costing (ABC) may better pharmacy orders. Requirements The controller has gathered the following information: Cok the loan to do the ownectaduate and costs.) X ormation regarding two recent pharmacy orders: sta.) 1. 2 Requirement 1. What is the traditional overhead rate based on the nu First identify the formula used to compute the traditional overhead rate. 4. What is the traditional overhead rate based on the number of prescriptions? How much pharmacy overhead would be allocated to customer order number 1247 if traditional overhead allocation based on the number of prescriptions is used? How much pharmacy overhead would be allocated to customer order number 1248 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 1247 if activity-based costing (ABC) is used to allocate the pharmacy overhead costs How much would be allocated to customer order number 1248 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. 5. 6. 7 Print Done
