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Cost Department Allocations In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of
Cost Department Allocations In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,608, and the Purchasing Department had expenses of $39,530 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Sales Number of employees: Weekly payroll (52 weeks per year) Residential Commercial $ 826,000 $ 1,095,000 Government Contract $ 2,514,000 130 75 80 Monthly payroll 34 45 32 Number of purchase requisitions per year 2,800 2,000 1,900 Required: a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Number of payroll checks: Weekly payroll x 52 Residential Commercial Government Contract Total Monthly payroll x 12 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 to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round interim calculations. Round your answers to two decimal places. a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. Number of payroll checks: Weekly payroll x 52 Residential Commercial Government Contract Total Monthly payroll x 12 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 to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round interim calculations. Round your answers to two decimal places. Support department allocation rates: Payroll Department Purchasing Department per distribution per requisition Support department allocations: Payroll Department Purchasing Department Total Residential Commercial Government Contract Total c. Residential's support department allocations are employees on a weekly payroll, which translates int higher than the other two divisions because Residential is a number of payroll transactions. user of support department services. Residential has many lower
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