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 $79,456, and the Purchasing Department had expenses of $27,730 for the year. The following annual data for Residential, Commerclal, and Government Contract divisions were obtained from corporate records: Government Residential Commercial Contract Sales $580,000 $ 768,000 $1,764,000 Number of employees: Weekly payroll (52 weeks per year) 210 70 75 Monthly payroll 36 47 34 Number of purchase requisitions per year 2,000 1,400 1,300 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 210 X 70 X 75 X 36 X 47 X 34 X Monthly payroll 75 X 34 X 109 X 1,300 X Total

Answer 1

1. As there are 52 weeks in a year and employees get separate check for every week, multiply weekly payroll by 52.

Residential commercial Total Government contract No.of payrooll checks Weckly payroll Monthly paysol) 10920 [52 x 210] 3640 (52x70) 3900 [52x75] 432 [12x36] 564 [12x47] 408 [12x34] 11352 4204 4308 19864 No. of Purchase requisitions 2000 1400 1300 4700 payroll Department - parchasing Department - 4 5.90 [ 79456 = 19864] [27730 & 4700] © Service Department charger Payroll Department 45408 purchasing Department 11800 17232 16816 79456 8260 7670 27730 57200 25076 24902

2. As there 12 months in a year and employees get separate check for every month, multiply monthly payroll by 12.