Service Department Charges 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 $47,008, and the Purchasing Department had expenses of $19,430 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) Monthly payroll Number of purchase requisitions per year Government Residential Commercial Contract $406,000 $538,000 $1,236,000 250 85 90 36 47 34 2,800 2,000 1,900 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 Residential 406,000 x Commercial Government Contract 1,236,000 x Total Monthly payroll Total Number of purchase requisitions per year b. Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round your interim calculations, round your answers to two decimal places, if required. Service department charge rates: Payroll Department Purchasing Department Residential Service department charges: Payroll Department Purchasing Department per payroll check per purchase requisition Commercial Government Contract Total Total c. Residential's service department charge is than the other two divisions because Residential is a department services. Residential has many employees on a weekly payroll, which translates into a Feedback Check My Work user of service number of payroll transactions. 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 activity base from (a). Then apply the rate per activity by the actual checks and requisitions. c. Consider how each department functions within the business. Learning Objective 3