Chapter 7, Problem 19E

Refer to the data in Exercise 7.18. When the capacity of the HR Department was originally established, the normal usage expected for each department was 20,000 direct labor hours. This usage is also the amount of activity planned for the two departments in Year 1 and Year 2.

Required:

1. 1. Allocate the costs of the HR Department using the direct method and assuming that the purpose is product costing.
2. 2. Allocate the costs of the HR Department using the direct method and assuming that the purpose is to evaluate performance.