In divisional income statements prepared for Burbank ElectricalCompany, the Payr

Question

In divisional income statements prepared for Burbank ElectricalCompany, the Payroll Department costs are charged back to userdivisions on the basis of the number of payroll checks, and thePurchasing Department costs are charged back on the basis of thenumber of purchase requisitions. The Payroll Department hadexpenses of $44,010, and the Purchasing Department had expenses of$18,720 for the year. The following annual data for Residential,Commercial, and Government Contract Divisions were obtained fromcorporate records:

                                              Residential         Commercial        Govern.Contract
Sales                                      $420,000            $500,000           $1,800,000
Numbers of Employees:
   Weekly payroll (52 wks/yr)    144                    72                     108
   Monthlypayroll                    25                      20                     18
Number of purchase req./yr     1,800                 1,530                 1,350

a. Determine the total amount of payroll checks and purchaserequisitions processed per year by each division.
b. Using the activity base information in (a), determine the annualamount of payroll and purchasing costs charged back to theResidential, Commercial, and Government Contract Divisions frompayroll and purchasing services.
c. Why does the Residential Division have a larger servicedepartment charge than the other two divisions, even though itssales are lower?

Explanation / Answer

I tried, but this is still confusing... anyone, please?

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