Regarding the allocation of overhead,

a. Discuss the theoretical merit of three different methods of allocating service department costs to production departments.

b. Distinguish between direct and indirect costs and their relationship in determining overhead application rates for production departments.

c. Discuss three different capacity approaches to use in estimating factory overhead and when (if ever) each would be appropriate.

d. Give three different bases that are appropriate for use with a predetermined annual factory overhead rate and the objectives and criteria a company should use in selecting each of these bases.