The company has its own Payroll Office, which provides payroll services to both divisions and will allocate its total expenses to the two divisions as support department allocations The following chart shows some basic data for the company: Hourly market rate for staff (the price the company would have to pay from an outside contractor for staff services) Average hourly cost rate for staff (the average price the company pays to its staff) Number of paychecks issued by Audit Division Number of paychecks issued by Tax Division Total expense for Payroll Office Amount of assets invested in Audit Division by BOR CPAS, Inc. Amount of assets invested in Tax Division by BOR CPAs, Inc. $100 $50 110 340 $29,250 $10,000,000 $4,000,000 Payroll Mr. Bailey would like you to start by analyzing the Payroll Office expenses, and allocating the total expenses to each division. He has decided to use the number of payroll checks as the activity base for the allocation. Fill in the following blanks, allocating the total expense for the Payroll Office to each of the two visions. Payroll Charge Rate : 65 per payroll check Division Audit Division Tax Division Support Department Allocations 7,150 22,100 Mr. Bailey has prepared the following divisional income statement for you to review, assuming no transfer of excess capacity hours occurs. He has also included the total amounts for BOR CPAs, Inc. in the rightmost column. Complete the following Divisional Income Statements with your data from the Payroll. BOR CPAs, Inc. Divisional Income Statements For the Year Ended December 31, 2018 Fees earned: Audit fees (12 engagements) Tax fees (45 engagements) Transfer-pricing fees Expenses Variable: Audit Division $900,000 Tax Division Total Company $900,000 $708,750 708,750 Audit hours provided by Audit Division Tax hours provided by Tax Division (180,000) (180,000) (236,250) (236,250) Excess capacity hours paid to salaried staff (40,000) (40,000) Audit hours provided by Tax Division 0 0 Fixed expenses (50,000) (65,500) (115,500) Operating income before support department allocations $670,000 $367,000 $1,037,000 Support department allocations for payroll Operating income