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 $80,784, and the Purchasing Department had expenses of $31,860 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records:

Line Item Description	Residential	Commercial	Government Contract
Sales	$666,000	$883,000	$2,026,000
Number of employees:
Weekly payroll (52 weeks per year)	215	70	75
Monthly payroll	38	49	36
Number of purchase requisitions per year	2,300	1,600	1,500

Required:

a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.

Line Item Description	Residential	Commercial	Government Contract	Total
Number of payroll checks:
Weekly payroll 52	fill in the blank 1	fill in the blank 2	fill in the blank 3
Monthly payroll 12	fill in the blank 4	fill in the blank 5	fill in the blank 6
Total	fill in the blank 7	fill in the blank 8	fill in the blank 9	fill in the blank 10
Number of purchase requisitions per year	fill in the blank 11	fill in the blank 12	fill in the blank 13	fill in the blank 14

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.

Department	Allocation Rate
Payroll Department	$fill in the blank 15 per distribution
Purchasing Department	$fill in the blank 16 per requisition

Department	Residential	Commercial	Government Contract	Total
Support department allocations:
Payroll Department	$fill in the blank 17	$fill in the blank 18	$fill in the blank 19	$fill in the blank 20
Purchasing Department	fill in the blank 21	fill in the blank 22	fill in the blank 23	fill in the blank 24
Total	$fill in the blank 25	$fill in the blank 26	$fill in the blank 27

c. Residential's support department allocations are fill in the blank 1 of 3

higher

than the other two divisions because Residential is a fill in the blank 2 of 3

heavy

user of support department services. Residential has many employees on a weekly payroll, which translates into a fill in the blank 3 of 3

larger

number of payroll transactions.

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 $80,784, and the Purchasing Department had expenses of $31,860 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Required: a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. 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. C. Residential's support department allocations are than the other two divisions because Residential is a user of support department services. Residential has many employees on a weekly payroll, which translates into a number of payroll transactions. Feadback Theck My Work a. Add the number of weekly and monthly payroll checks for each division. Add the number of requisitions for each division. b. Divide the Payroll and Purchasing expenses by the appropriate cost driver from (a). Then apply the rate per cost driver by the actual checks and requisitions. c. Consider how each department functions within the business. 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 $80,784, and the Purchasing Department had expenses of $31,860 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Required: a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. 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. C. Residential's support department allocations are than the other two divisions because Residential is a user of support department services. Residential has many employees on a weekly payroll, which translates into a number of payroll transactions. Feadback Theck My Work a. Add the number of weekly and monthly payroll checks for each division. Add the number of requisitions for each division. b. Divide the Payroll and Purchasing expenses by the appropriate cost driver from (a). Then apply the rate per cost driver by the actual checks and requisitions. c. Consider how each department functions within the business