Albemarle, 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:
Normal support department usage is 12,000 hours each for Department X and Department Y.
Required:
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.

Question

Albemarle, 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:
  Normal support department usage is 12,000 hours each for Department X and Department Y.
Required: 
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.

Quizplus · Accepted Answer

The Answer of Albemarle, 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:
  Normal support department usage is 12,000 hours each for Department X and Department Y.
Required: 
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.