O’Brian’s Department Stores allocates the cost of the personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture.
O’Brian’s Department Stores allocates the cost 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. O’Brian’s allocates personnel department costs in 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:
Personnel Payroll Housewares Clothing Furniture Direct department costs 6,900 3,200 12,200 20,000 15,750 Number of employees 5 3 8 15 4 Gross payroll 6,000 3,300 11,200 17,400 8,100
a. Determine the percentage of total Personnel Department services that was provided to the payroll department. b. Determine the percentage of total payroll department services that was provided to the personnel department. c. Prepare a schedule showing personnel department and payroll department cost allocations to the operating departments, assuming O’brians uses the step method. (round calculations to the nearest dollar)
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