Reference no: EM131677577

Question - Tuscola Pharmacy is a drug store that has traditionally allocated its overhead based on the number of prescriptions in each customer's order. Some orders come from walk-in customers and other orders come from an arrangement with a local ready care clinic to fill orders for its clients. Tuscola's general manager would like to simplify operations and accept either walk-in customers or clinic clients, but not both. The controller provided the following information about overhead costs using activity-based costing to assist the manager in making the decision:

Tuscola's accounting clerk gathered the following information regarding two recent pharmacy orders. Orders starting with "R" relate to walk-in customers and those starting with "S" relate to clinic clients. Answer the following questions.

1. Calculate the amount of overhead that would be charged to order #R1137 if traditional costing rates were used.

2. How much overhead would be allocated to order #R1137 if activity-based costing was used?

3. By how much is Order #S2013 over- or under-costed when using traditional costing compared to ABC costing? Enter an over-costed amount as a positive number and under-costed amount as a negative number.

Please give answers with process.