Cost Department Allocations 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 $61,284, 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 Sales $ 552,000 $ 731,000 $ 1,679,000 Number of employees: Weekly payroll (52 weeks per year) 245 60 65 Monthly payroll 30 41 28 Number of purchase requisitions per year 2,500 1,800 1,700 Required: 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 × 52 Monthly payroll × 12 Total Number of purchase requisitions per year b. Using the cost driver information in (a), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round interim calculations. Round your answers to two decimal places. Support department allocation rates: Payroll Department $ per distribution Purchasing Department $ per requisition Residential Commercial Government Contract Total Support department allocations: Payroll Department $ $ $ $ Purchasing Department Total $ $ $ c. Residential's support department allocations are than the other two divisions because Residential is a user of support department services. Residential has many employees on a weekly payroll, which translates into a number of payroll transactions.

Cost Department Allocations 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 $61,284, 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 Sales $ 552,000 $ 731,000 $ 1,679,000 Number of employees: Weekly payroll (52 weeks per year) 245 60 65 Monthly payroll 30 41 28 Number of purchase requisitions per year 2,500 1,800 1,700 Required: 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 × 52 Monthly payroll × 12 Total Number of purchase requisitions per year b. Using the cost driver information in (a), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round interim calculations. Round your answers to two decimal places. Support department allocation rates: Payroll Department $ per distribution Purchasing Department $ per requisition Residential Commercial Government Contract Total Support department allocations: Payroll Department $ $ $ $ Purchasing Department Total $ $ $ c. Residential's support department allocations are than the other two divisions because Residential is a user of support department services. Residential has many employees on a weekly payroll, which translates into a number of payroll transactions.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 5E: Service department charges In divisional income statements prepared for Demopolis Company, the...

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Cost Department Allocations

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 $61,284, 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
Sales	$ 552,000		$ 731,000		$ 1,679,000
Number of employees:
	Weekly payroll (52 weeks per year)	245		60		65
	Monthly payroll	30		41		28
Number of purchase requisitions per year	2,500		1,800		1,700

Required:

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 × 52
Monthly payroll × 12
Total
Number of purchase requisitions per year

b. Using the cost driver information in (a), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Do not round interim calculations. Round your answers to two decimal places.

Support department allocation rates:
Payroll Department	$ per distribution
Purchasing Department	$ per requisition

	Residential	Commercial	Government Contract	Total
Support department allocations:
Payroll Department	$	$	$	$
Purchasing Department
Total	$	$	$

c. Residential's support department allocations are than the other two divisions because Residential is a user of support department services. Residential has many employees on a weekly payroll, which translates into a number of payroll transactions.

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