In divisional income statements prepared for Mills Construction Purchasing Depar

Question

In divisional income statements prepared for Mills Construction Purchasing Department costs are charged back on the basis of the number of purchase requisiions. The Payrol Department had expenses of $63,856, and the Purchasing Department hud expenses of $25,370 for the year. The following annual data for Residential, Commercial, and Govenment Contract divisions were abtained from corporate records: 530,000 703,000 $1,614,000 Weekdy payroll (52 weeks per year) 155 36 1,800 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. 1,200 Total Contract Number of payroll checks: Weelkdy payrol Monthly payroll costs charged back to the Residential, Commercial, and Government Contract divisions places, if required from payroll and purchasing services. If required, round your answers to two decimal places. Do not round your interim calculations, round your answers to two decimal charge rates: O Ask me

Explanation / Answer

a.

Service department charge rates:

Payroll department : $ 63,856 / 15,964 = $ 4 per check

Purchasing department: $ 25,370 / 4,300 = $ 5.90 per requisition

Residential Commercial Government contract Total Number of payroll checks Weekly payroll 8,060 3,120 3,380 14,560 Monthly payroll 432 564 408 1,404 Total 8,492 3,684 3,788 15,964 Number of purchase requisitions per year 1,800 1,300 1,200 4,300

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