Question

Service Department Charges In divisional income statements prepared for Demopolis 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 $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: ResidentialCommercialGovernment Contract Sales$2,000,000 $3,250,000 $2,900,000 Number of employees: Weekly payroll (52 weeks per year)400 250 150 Monthly payroll80 30 10 Number of purchase requisitions per year7,500 3,000 2,000 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.

Answer 1

Answer and Explanation:

The computation of the total amount of payroll checks and purchased requisitions processed per year is shown below:

Particulars       Residential        Commercial        Government Contract      Total

Number of payroll checks:

Weekly payroll  $20,800)         $13,000                  $7,800 $41,600

                           (400 × 52 weeks)   (250 × 52 weeks )   (150 × 52 weeks)

Monthly payroll    $960              $360                       $120           $1,440

                              (80 × 12)       (30 × 12)                      (10 × 12)

Total                      $21,760         $13,360                    $7,920          $43,040

Number of purchase requisitions per year 7,500 3,000 2,000 12,500