Currently, overhead is allocated based on a rate per perscription. During the budgeting process each year, the pharmacy predetermines the overhead rate. For the current year, the predetermined rate is $ which is allocated to each service that include medicine dispensing. The two services that do not include medicine dispensing under the current traditional allocation system do not receive any overhead allocation. Compare the costs for each service given the two costing system. Identify if there are any cases of cost subsidization occurring among the four services.

Answer rating: 100% (QA)

To compare the costs for each service under the current traditional allocation system and the proposed system we need to calculate the overhead alloca... View the full answer