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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