Managerial Accounting

Question 1: Why do managers allocate overhead costs to products?

Question 2: Describe the three methods of allocating overhead costs.

Question 3: What is a cost pool, and how does it relate to allocating overhead to products?

Question 4: What is the difference between an activity and a cost driver?

Question 5: How do cost flows using activity-based costing differ from cost flows using one plant-wide rate?

Question 6: Explain how to record the application of overhead to products using activity-based costing.

Question 7: Describe the three steps required to implement activity-based management.

Question 8: How does activity-based management differ from activity-based costing?

Question 9: What is the difference between a value-added activity and a non-value-added activity? Please povide two examples of non-value-added activities for each of the following:
a. Fast-food restaurant
b. Clothing store
c. College bookstore

Question 10: What selling costs and general and administrative costs might be allocated to products using activity-based costing? Why do some managers prefer allocating these costs to products?

Question 11: What are service departments? Why do some managers allocate service department costs to production departments?

Question 12: Describe the four categories included in the hierarchy of costs.

Question 13: What is the difference between a facility-level cost and a unit-level cost?

Question 14: How does the hierarchy of costs help managers allocate overhead costs?

Question 15: Describe the four categories related to the costs of quality. How might the allocation of quality costs to these four categories help managers?