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Chan Kwan LLP is a law firm that specializes in working with business clients. Lily Li, the firm's controller assesses the manager of each of

Chan Kwan LLP is a law firm that specializes in working with business clients. Lily Li, the firm's controller assesses the manager of each of its departments on their ability to control costs. As such, he wants to properly allocate the costs of their two major service departments, Human resources, and Office services to their two production departments, Paralegal and Corporate.

It should be noted that Human resources and Office services also provide services to each other. Human resources costs are allocated based on the number of employees in each department and Office services costs are allocated based on the hours of service provided to each department. Department costs, along with the hours of service provided and the number of employees that worked in each department during April are provided below.

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April Data Human Office Paralegal Corporate resources services department department Budgeted costs $376,200 $629,500 $1,335,000 $1, 170,000 Actual costs $381,600 $609,650 $1, 152,000 $1,233,600 Actual hours of service provided 3,060 6,000 8,500 5,440 Actual number of employees 10 21 24 15

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