Question

The centralized purchasing department for Ridgewood, Inc. has monthly expenses of $42,000. The department has prepared 3,500 purchase requisitions this month. Division L initiated 700 purchases and Division G initiated 500 purchases. How much Division G should be charged for purchases

Answer 1

Answer:

Division G should be charged $6,000

Explanation:

cost per purchase requisition = $42,000 / 3,500 = $12 per purchase requisition

Division G initiated 500 purchases, so it should be charged 500 x $12 = $6,000

Division L initiated 700 purchases, so it should be charged 700 x $12 = $8,400

The other departments should be charged the remaining amount = $42,000 - ($6,000 + $8,400) = $27,600