eBook Service Department Charges In divisional income statements prepared for Wi

Question

eBook Service Department Charges In divisional income statements prepared for Wilborne 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 $119,280, and the Purchasing Department had expenses of $57,750 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government Contract Sales Number of employees: $900,000 $1,218,750 $2,800,000 Weekly payroll (52 weeks per year) Monthly payroll 250 50 3,750 125 100 3,125 150 60 2,750 Number of purchase requisitions per year a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.

Explanation / Answer

Solution.

b)

c) Residential's service department charge is Higher than the other two divisions because Residential is a Largest user of service department services. Residential has many employees on a weekly payroll, which translates into a Greater number of check-issuing transactions.

Residential Commercial Government Contract Total Service Department charges Payroll Department $54400 $30800 $34080 $119280 Purchasing Department $22500 $18750 $16500 $57750 Total $76900 $49550 $50580

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