1. 6.1 What is the predetermined overhead rate, and when is it typically estimated?
2. 6.1 6.3 When is an activity-based costing system better than a traditional allocation system?
3. 6.2 What is the advantage of labeling activities as value added or nonvalue added?
4. 6.2 What conditions are necessary to designate an activity as a cost driver?
5. 6.2 For each cost pool, identify an appropriate cost driver.

A. order department
B. accounts receivable processing
C. catering
D. raw material inventory

6. 6.3 How is the primary focus of activity-based costing different from that of traditional allocation?
7. 6.3 What are the primary differences between traditional and activity-based costing?
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8. 6.3 How are service companies similar or different from manufacturing companies in using ABC costing?
9. 6.3 How are costs allocated in an ABC system?
10. 6.4 In production, what has changed to allow ABC costing to become valuable?
11. 6.4 Why is it important to know the true cost for a product or service?
12. 6.5 What is the primary difference between variable costing and absorption costing?
13. 6.5 Why would managers prefer variable costing over absorption costing?
14. 6.5 Why is absorption costing the method allowable for GAAP?
15. 6.5 Can a company gather information for both variable and absorption costing systems?