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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 $28,160 The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Government Residential Commercial Contract Sales $589,000 $780,000 $1,791,000 Number of employees: Weekly payroll (52 weeks per year) 210 60 65 Monthly payroll 34 45 32 Number of purchase requisitions per year 2,700 1,900 1,800 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 10,920 3,120 3,380 Monthly payroll 408 540 3847 Total 11,328 3,660 3,764 18,752 Number of purchase requisitions per year: : 2,700 1,900 1,800 6,400 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. 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 $ $ user of service department services. Residential has many employees on a weekly c. Residential's service department allocation is payroll, which translates into a than the other two divisions because Residential is a number of check-issuing transactions. Feedback Check 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 activity by the actual checks and requisitions. c. Consider how each department functions within the business