1. 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 $60,624, and the Purchasing Department had expenses of $37,760 The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records:

   		Residential		Commercial		Government Contract
   Sales		$789,000		$1,046,000		$2,402,000
   Number of employees:
   	Weekly payroll (52 weeks per year)	115		75		80
   	Monthly payroll	28		39		26
   	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.

   	Residential	Commercial	Government Contract	Total
   Number of payroll checks:
   Weekly payroll	fill in the blank 1	fill in the blank 2	fill in the blank 3
   Monthly payroll	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 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	$fill in the blank 15 per distribution
   Purchasing Department	$fill in the blank 16 per requisition

   	Residential	Commercial	Government Contract	Total
   Service 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 service department allocation is higher than the other two divisions because Residential is a heavy user of service department services. Residential has many employees on a weekly payroll, which translates into a larger number of check-issuing transactions.