The accounting department of Trotter Co. prepares payroll checks for the entire

Question

The accounting department of Trotter Co. prepares payroll checks for the entire company. Their expense for the current period is $775,000. The department processed 25,000 checks for the company as a whole last period. Partial information concerning the usage of the accounting department’s payroll function is as follows:

                        Assembly dept.         Sales dept.    Admin Office             Marketing dept.

No. of checks                        1,268                  213                   462                            1,115

Required: calculate the service charges to be assessed to all four departments of Trotter Co. for the use of the accounting department’s payroll function.

                        Assembly dept.         Sales dept.    Admin Office             Marketing dept.

Explanation / Answer

Answer:

Expense for processing checks in current period = $775000

No. of checks = 25000

Expense per check = $775000/25000 = $31

Assembly Dept. = $31 x 1268 = $39308

Sales Dept. = $31 x 213 = $6603

Admin Office = $31 x 462 = $14322

Marketing Dept. = $31 x 1115 = $34565

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