Question
The unit for determining sales revenue in both divisions is the engagement, which means the total agreed-upon work for a given client in either audit
The unit for determining sales revenue in both divisions is the "engagement," which means the total agreed-upon work for a given client in either audit or tax for a given year. The company charges on average a fee of $75,000 per audit engagement, and $15,750 per tax engagement. 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 service department charges. The chart below 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) $110.00 Average hourly cost rate for staff (the average price the company pays to its staff) $50.00 Number of paychecks issued by Audit Division 110 Number of paychecks issued by Tax Division 340 Total expense for Payroll Office $29,250 Amount of assets invested in Audit Division by BOR CPAs, Inc. $10,000,000 Amount of assets invested in Tax Division by BOR CPAs, Inc. $4,000,000...
Fill in the blanks below, allocating the total expense for the Payroll Office to each of the two divisions.
Payroll Charge Rate $65.00 | per payroll check |
Points:
Division | Allocated Service Department Charges |
Audit Division | ? |
Tax Division | ? |
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