Problem
Answer all of the followings questions in its entirety.
1. Why are overhead costs allocated to products and not traced to products as direct materials and direct labor are?
2. What are three common methods of assigning overhead costs to a product?
3. Why are direct labor hours and machine hours commonly used as the basis for overhead allocation?
4. what are the advantages of using a single plantwide overhead rate?
5. The usefulness of a single plantwide overhead rate is based on two assumptions. What are those assumptions?
6. What is cost object?
7. In what way are departmental overhead rates similar to a single plantwide overhead rate? How are they different?
8. What is the first step in applying activity-based costing?
9. What is an activity cost driver?
10. What are four activity levels associated with activity-based costing? Define each.