Financial and Managerial Accounting: E24-5 In divisional income statements prepared for Franklin

Financial and Managerial Accounting 
E24-5 Service department charges 
In divisional income statements prepared for Franklin Electrical Company, the Payroll Department costs are changed back to user divisions on the basis of the number of payroll checks, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses 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 from corporate records: 
Residential Commercial Government Contract 
Sales 420,000 500,000 1,800,000 
Number of employees: 
Weekly payroll 52 weeks 144 72 108 
Monthly Payroll 25 20 18 
# of Purchase Requisitions per year: 1,800 1,530 1,350 

Instruction: 
a. Determine the total amount of payroll check and purchase requisitions processed per year by each division. 
b. Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract Divisions from the payroll services. 
c. Why does the Residential Division have a larger service department charge than the other two divisions, even though its sales are lower?
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