Refer to the data in 6-7. When the capacity of the Power Department was originally estab¬

lished, the normal usage expected for each department was 2,000 machine hours. This us¬

age is also the amount of activity planned for the two departments in 2000 and 2001.

Required:

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

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