Fixed and Variable Cost Allocation 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	30,000	31,000
Department B	39,000	31,000
Total hours	69,000	62,000
Actual HR cost	$122,250	$122,250
Budgeted HR cost	117,250*	115,500*

*$0.25 per direct labor hour plus $100,000.

When the capacity of the HR Department was originally established, the normal usage expected for each department was 17,000 direct labor hours. This usage is also the amount of activity planned for the two departments in Year 1 and Year 2.

Required:

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

	Department A	Department B
Variable Costs	$	$
Fixed Cost	$	$
Total Cost	$	$

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

	Year 1		Year 2
	Department A	Department B	Department A	Department B
Variable Costs	$	$	$	$
Fixed Costs	$	$	$	$
Total Cost	$	$	$	$