Service Department Charges

In divisional income statements prepared for LeFevre Company,the Payroll Department costs are charged back to user divisions onthe basis of the number of payroll distributions, and thePurchasing Department costs are charged back on the basis of thenumber of purchase requisitions. The Payroll Department hadexpenses of $75,584, and the Purchasing Department had expenses of$25,960 for the year. The following annual data for Residential,Commercial, and Government Contract divisions were obtained fromcorporate records:

	Residential	Commercial	Government Contract
Sales	$543,000		$719,000		$1,651,000
Number of employees:
	Weekly payroll (52 weeks per year)	190		70		75
	Monthly payroll	38		49		36
Number of purchase
	requisitions per year	1,900		1,300		1,200

a. Determine the total amount of payroll checksand purchase requisitions processed per year by the company andeach division.

	Residential	Commercial	Government Contract	Total
Number of payroll checks:
Weekly payroll
Monthly payroll
Total
Number of purchase requisitions per year:

b. Using the activity base information in (a),determine the annual amount of payroll and purchasing costs chargedback to the Residential, Commercial, and Government Contractdivisions from payroll and purchasing services. If required, roundyour answers to two decimal places. Do not round your interimcalculations, round your answers to two decimal places, ifrequired.

Service department charge rates:
Payroll Department	$ payroll distribution
Purchasing Department	$ per requisition

	Residential	Commercial	Government Contract	Total
Service department charges:
Payroll Department	$	$	$	$
Purchasing Department
Total	$	$	$

c. Residential's service department chargeis   than the other two divisions becauseResidential is a   user of service departmentservices. Residential has many employees on a weekly payroll, whichtranslates into a   number of check-issuingtransactions.