1. Why do managers allocate overhead costs to products?

2. Describe the three methods of allocating overhead costs.

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

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

5. How do cost flows using activity-based costing differ from cost flows using one plantwide rate?

6. Describe the five steps required to implement activity-based costing.

7. What are some advantages of using an activity-based costing system?

8. What are some disadvantages of using an activity-based costing system?