Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
a).
Number Of Payroll Checks Residential Government Contract Commercial Total
Weekly Payroll 52 × 400 = 20,800 52 × 150=7,800 52 × 250 = 13,000 41,600
Monthly Payroll 12 × 80 = $960 12 × 10 =120 12 × 30=360 1,440
Total 21,760 7,920 13,360 43,040
Number of Purchase Requisitions Per Year 7,500 2,000 3,000 12,500
Weekly Payroll = Weeks Per Year × Payroll Per Week
Monthly Payroll = Months Per Year × Payroll Per Month
b).Charge Rate of Service Department:-
Purchasing Department
= Purchasing Department Expenses ÷ Number of Purchase Requisitions Per Year
= ($40,000 ÷ 12,500)
= $3.2 Per Purchase Requisition
Payroll Department
= Payroll Department Expenses ÷ Total No. of Payroll Checks
= ($64,560 ÷ 43,040)
= $1.5 Per Payroll Check
Service Department Charges:-
Payroll Department ($) Purchasing Department ($) Total ($)
Residential 1.5 × 21,760 = 32,640 3.2 × 7,500 = 24,000 56,640
Commercial 1.5 × 13,360 = 20,040 3.2 × 3,000 = 9,600 29,640
Government Contract 1.5 × 7,920 = 11,880 3.2 × 2,000 = 6,400 18,280
Total 64,560 40,000 104,560
c) Residential service department pays more than the other two divisions because residential service department is a strong user of services. Residential has some weekly payroll employees which convert into a large number of payroll transactions.
