In divisional income statements prepared for Iguana Construction Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll checks, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $62,704, and the Purchasing Department had expenses of $31,860 for the year. The following annual data for the Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government Contract Sales $666,000 $883,000 $2,026,000 Number of employees: Weekly payroll (52 weeks per year) 125 75 80 Monthly payroll 28 39 26 Number of purchase requisitions per year 2,300 1,600 1,500 Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Round charge rate answers to nearest cent. Service department charge rates: Payroll Department $fill in the blank 15 per payroll check Purchasing Department $fill in the blank 16 per purchase requisition Residential Commercial Government Contract Total Service department charges: Payroll Department $fill in the blank 17 $fill in the blank 18 $fill in the blank 19 $fill in the blank 20 Purchasing Department $fill in the blank 21 $fill in the blank 22 $fill in the blank 23 $fill in the blank 24 Total $fill in the blank 25 $fill in the blank 26

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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In divisional income statements prepared for Iguana Construction Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll checks, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $62,704, and the Purchasing Department had expenses of $31,860 for the year. The following annual data for the Residential, Commercial, and Government Contract divisions were obtained from corporate records:

	Residential	Commercial	Government Contract
Sales	$666,000		$883,000	$2,026,000
Number of employees:
Weekly payroll (52 weeks per year)	125		75	80
Monthly payroll	28		39	26
Number of purchase requisitions per year	2,300		1,600	1,500

Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. Round charge rate answers to nearest cent.

Service department charge rates:
	Payroll Department	$fill in the blank 15 per payroll check
	Purchasing Department	$fill in the blank 16 per purchase requisition

	Residential	Commercial	Government Contract	Total
Service department charges:
	Payroll Department	$fill in the blank 17	$fill in the blank 18	$fill in the blank 19	$fill in the blank 20
	Purchasing Department	$fill in the blank 21	$fill in the blank 22	$fill in the blank 23	$fill in the blank 24
		Total	$fill in the blank 25	$fill in the blank 26

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