In order for a business to control costs, it must first identify the costs that can be incurred and the nature of these costs. It is critical that managers are able to identify what causes costs, as well as their nature and behavior. To explore this concept and to tie real world situations to your studies this week, use a past or present work environment to respond in full sentences to the following questions:

1. Identify the past or present work environment and summarize the primary services or goods provided by this entity.
2. What are the top one to three primary activities that would drive costs for this entity?
3. For the activities, please identify a minimum of six costs and evaluate them according to the following terms:
   1. Fixed, variable or semi-variable in terms of the activities. If semi-variable, identify the fixed and variable elements.
   2. Direct or indirect in terms of the activities.
   3. Period or product, in terms of the activities. If product costs, further classify as materials, labor or overhead.
4. Furthermore, when it comes to costing our goods or services (or as the text calls them "jobs"), while we are able to trace direct materials and direct labor to the jobs, we must allocate overhead using a predetermined overhead rate. Continuing with the activities and costs that you discussed in the previous requirements:
   1. Compose the predetermined overhead rate by:
      1. Identifying the costs that comprise the overhead cost pool.
      2. Identifying the activity base to be used to allocate overhead.
   2. Briefly support your chosen costs and activity base.
5. Wrap up your discussion by describing one key point that you learned or that surprised you from looking at your work activities in this manner.

For your responses, focus on the following questions:

1. Compared to your chosen business,
   1. Are the activities similar or different? How so?
   2. Are similar costs categorized the same as far as type and behavior? If not, how are they categorized differently?
   3. Are the included costs and allocation bases for the predetermined overhead rate similar or different? Why may differences exist?