Service Department Charges

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 $28,752, and the Purchasing Department had expenses of $12,470 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Government Residential Commercial Contract Sales $261,000 345,000 $793,000 Number of employees Weekly payroll (52 weeks per year) 120 65 70 Monthly payroll 28 39 26 Number of purchase requisitions per year 1,800 1,300 1,200 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 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 per payroll check per purchase requisition Residential Commercial Government Contract Total Service department charges: Payroll Department Purchasing Department Total c. Residential's service department charge is higher Vthan the other two divisions because Residential is a heavyuser of service department services. Residential has many employees on a weekly payroll, which translates into a largernumber of payroll transactions