101. How do companies assign and allocate costs? a) In your own words, what is predetermined overhead allocation rate and how is it calculated? b) If estimated overhead costs for the year are expected to be $100,000 and estimated machine hours for the year is 20,000 hours, what is the predetermined overhead allocation rate? c) Based on your answer in part b) above, what would be the allocated manufacturing overhead costs be for the month of January if 2,000 machine hours are used? LO2. How is an activity-based costing system developed? a) In your own words, briefly describe activity-based management (ABM)? b) What is an activity? c) In your own words, describe activity-based costing (ABC)? d) If total estimated overhead costs for setups is $100,000, estimated number of setups for Product A is 10,000 and estimated number of setups for Product B is 40,000, what is the predetermined overhead allocation rate? e) If the predetermined overhead allocation rate is $1.00 per test, what is the allocated manufacturing overhead costs if Product C had 2,000 actual tests? LO3. How can companies use activity-based management to make decisions? a) means revaluating activities to reduce costs while still meeting customer needs. b) is the amount customers are willing to pay for a product or service. is the cost to develop, produce, and deliver the product or service. d) is the maximum cost to develop produce, and deliver the product or service and earn the desired net profit. 104. How can activity-based management be used in service companies? a) An appliance repair business has the following predetermined overhead allocation rates related to each service appointment: Service call center used to set appointments: $2 per appointment Oil, gas, and repairs on truck: $10 per appointment Hourly wage for repair technician while on route to service call: $15 per appointment i) What is the allocated overhead costs per service appointment? ii) What would be the amount of allocated overhead costs for the current week if three (3) service technicians each had 16 repair appointments during the week? 2 LO5. How do just-in-time management systems work? a) In your own words, what is the purpose of JIT LO6. How do companies manage quality using a quality management system? a) In your own words, what is a QMS? b) What are the four types of quality related costs and briefly describe cach: i) ii) 11) V iv)