Earl,Inc,Has Two Producing Departments Normal Support Department Usage Is 12,000 Hours Each for Department

question 4

Essay

Earl,Inc.,has two producing departments.Each producing department is held responsible for a share of the costs of a support department.
Actual and budgeted data are as follows:
$\begin{array}{l}&\text { Current Year }\\\text { Support department hours used: }\\\text { Department } X & 8,000 \\\text { Department } Y & 16,000 \\\text { Total hours } & 24,000\\\\\text { Support department costs: }\\\text { Actual support department costs } & \$ 72,000 \\\text { Budgeted fixed service centre costs } & \$ 24,000 \\\text { Budloted variable rate per hour } & \$ 3,00\end{array}$ Normal support department usage is 12,000 hours each for Department X and Department Y.
a.Assuming the purpose is product costing,allocate the costs of the support department using the direct method.
b.Assuming the purpose is to evaluate performance,allocate the costs of the support department.

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Definitions:

Employee Association

An organization of workers formed to promote their collective interests, rights, and well-being within the workplace.

White-Collar Employees

Workers who perform job duties in an office or other professional setting, often involving administrative, clerical, or managerial tasks, as opposed to blue-collar workers who perform manual labor.

Interest-Based Bargaining

A negotiation strategy focusing on mutual interests rather than positions, aiming for win-win solutions.

Mutual Interests

Shared common goals or concerns between parties that provide a basis for cooperation or partnership.