Interdepartment Services: Step Method Jane Cooper\'s Department Stores allocates

Question

Interdepartment Services: Step Method 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. Cooper's allocates Per sonnel 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

Explanation / Answer

Payroll Department services provided to Personnel Department = $12000 / $75500 = 15.9%

c.

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%

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