1. Provide general discussion on predetermined variable overhead criterion and its possible

dependence on the activity for which it is used.

a. Provide a variable costing income statement in which variable overhead is divided among

different activities, and that each activity has its own predetermined variable overhead

criterion.

b. Explain your example in detail and provide in-text citations.

2. The following is a partially completed lower section of a departmental expense allocation for

Cozy Bookstore. It reports the total amounts of direct and indirect expenses allocated to its five

departments. Allocate the expenses of the two service departments (advertising and purchasing)

to the three operating departments and provide the complete income statement.