Jane Cooper\'s Department Stores allocates the costs of the Personnel and Payrol
ID: 2588094 • Letter: J
Question
Jane Cooper's Department Stores allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture. In addition to providing services to the operating departments, Personnel and Payroll provide services to each other. Copper's allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis of gross payroll. Cost and allocation information for June is as follows:
(a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.)
Answer
%
(b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer one decimal place.)
Answer
%
(c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming Cooper's uses the step method.
For each department below, enter the total costs calculated from your schedule.
Do not round until your final answers. Round answers to the nearest dollar.
Personnel Payroll Housewares Clothing Furniture Direct department cost $ 15,600 $ 6,400 $ 24,400 $ 40,000 $ 33,500 Number of employees 15 12 24 32 12 Gross payroll $ 12,000 $ 6,600 $ 21,200 $ 26,100 $ 16,200Explanation / Answer
Workings:
Since the percentage of services provided by Payroll Department to Personnel Department is higher at 15.9% than vice-versa, Payroll Department costs are allocated first.
Allocation of Payroll department costs in the ratio of gross payroll 12000 : 21200 : 26100 : 16200. Total 75500
Allocation of Personnel department costs in the ratio of number of employees 24 : 32 : 12. Total 68
(a) Personnel Department services provided to Payroll Department: 15.0% Total number of employees (excluding Personnel department) = 12 + 24 + 32 + 12 = 80 Number of employees in Payroll department = 12 Personnel Department services provided to Payroll Department = 12/80 = 15% (b) Payroll Department services provided to Personnel Department: 15.9% Total gross payroll (excluding Payroll department) = $12000 + 21200 + 26100 + 16200 = $75500 Gross payroll in Personnel department = $12000 Payroll Department services provided to Personnel Department = $12000 / $75500 = 15.9%Related Questions
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