Kumar, Inc., evaluates managers of producing departments on their ability to control costs. In addition to the costs directly traceable to their departments, each production manager is held responsible for a share of the costs of a support center, the Human Resources (HR) Department. The total costs of HR are allocated on the basis of actual direct labor hours used. The total costs of HR and the actual direct labor hours worked by each producing department are as follows: Year 1 Year 2 Direct labor hours worked: Department A 29,000 30,000 Department B 45,000 30,000 Total hours 74,000 60,000 Actual HR cost $123,500 $123,500 Budgeted HR cost 118,500* 115,000* *$0.25 per direct labor hour plus $100,000.

Kumar, Inc., evaluates managers of producing departments on their ability to control costs. In addition to the costs directly traceable to their departments, each production manager is held responsible for a share of the costs of a support center, the Human Resources (HR) Department. The total costs of HR are allocated on the basis of actual direct labor hours used. The total costs of HR and the actual direct labor hours worked by each producing department are as follows: Year 1 Year 2 Direct labor hours worked: Department A 29,000 30,000 Department B 45,000 30,000 Total hours 74,000 60,000 Actual HR cost $123,500 $123,500 Budgeted HR cost 118,500* 115,000* *$0.25 per direct labor hour plus $100,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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