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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
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 $60,720, and the Purchasing Department had expenses of $29,480 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Sales Number of employees: Residential Commercial $616,000 $ 817,000 Government Contract $ 1,875,000 Weekly payroll (52 weeks per year) 240 60 65 Monthly payroll 32 43 30 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 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 Residential Support department allocations: Payroll Department Purchasing Department Total per distribution per requisition Commercial Government Contract Total c. Residential's support department allocations are than the other two divisions because Residential is a user number of payroll of support department services. Residential has many employees on a weekly payroll, which translates into a transactions
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