24.4

Service Department Allocations In divisional income statements prepared for Lemons Company, the Payroll Department costs are allocated to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are allocated on the basis of the number of purchase requisitions. The Payroll Department had costs of $56,256, and the Purchasing Department had expenses of $26,840 The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Government Residential Commercial Contract Sales $561,000 $743,000 $1,707,000 Number of employees Weekly payroll (S2 weeks per year) 190 70 75 Monthly payroll 34 45 32 Number of purchase requisitions per year 2,600 1,800 1,700 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division, Government Residential Commercial Contract Total Number of payroll checks: Weekly payroll Monthly payroll Total Number of purchase requisitions per year: b. Using the cost driver information in (a), determine the annual amount of payroll and purchasing costs allocated back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round interim calculations. requisitions per year 2,600 1,800 1,700 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division Government Residential Commercial Contract Total Number of payroll checks: Weekly payroll Monthly payroll Total Number of purchase requisitions per year: IT b. Using the cost driver information in (a), determine the annual amount of payroll and purchasing costs allocated back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round Interim calculations. Service department allocation rates: Payroll Department per distribution Purchasing Department per requisition Residential Commercial Government Contract Total Service department allocations: Payroll Department Purchasing Department Total c. Residential's service department allocation is than the other two divisions because Residential is a user of service department services Residential has many employees on a weekly payroll, which translates into a number of check-issuing transactions