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Homework answers / question archive / 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

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

Accounting

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 $46,332, and the Purchasing Department had expenses of $26,400 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records Residential Commercial Government Contract $1,679,000 $552,000 $731,000 Sales Number of employees: Weekly payroll (52 weeks per year) Monthly payroll Number of purchase 145 60 65 36 47 34 requisitions per year 2,500 1,800 1,700 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
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. If required, round your answers to two decimal places. Do not round your interim calculations, round your answers to two decimal places, if required. Service department charge rates: Payroll Department payroll distribution Purchasing Department per requisition Residential Commercial Government Contract Total Service department charges! Payroll Department Purchasing Department Total c. Residential's service department charge is than the other two divisions because Residential is a user of service department services, Residential has many employees on a weekly payroll, which translates into a number of check-issuing transactions

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  • Requirement [a]
 

Residential

Commercial

Government contract

Total

No. of payroll checks:

       

Weekly Payroll [no of employees x 52]

7540

3120

3380

 

Monthly payroll [no of employees x 12]

432

564

408

 

Total

7972

3684

3788

15444

No. of purchase requisititon per year

2500

1800

1700

6000

 

  • [b]
 

Cost

Allocation base

Service Department charge rate

Payroll Department

$                46,332.00

                  15,444

$                   3.00

per payroll distribution

Purchasing Department

$                26,400.00

                     6,000

$                   4.40

per requisition

 

 

Residential

Commercial

Government Contract

Total

Service Department charges:

       

Payroll Department

$               23,916.00

$         11,052.00

$         11,364.00

$        46,332.00

Purchasing Department

$                11,000.00

$            7,920.00

$            7,480.00

$        26,400.00

Total

$                34,916.00

$         18,972.00

$         18,844.00

$        72,732.00

 

  • [c]

Residential's service department charge 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.