Question

Interdepartment Services: Step Method O'Brian'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. O'Brian's allocates Personnel 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: Personnel Payroll Housewares Clothing Furniture Direct department cost $7,300 $3,800 $12,300 $20,000 $15,650 Number of employees 5 2 8 14 3 Gross payroll $6,100 $2,800 $10,800 $17,200 $8,500 (a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.) Answer % (b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer to one decimal place.) Answer % (c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming O'Brian's uses the step method. For each department below, enter the total costs calculated from your schedule.    Do not round until your final answers. Round answers to the nearest dollar. Service Departments Producing Departments Payroll Personnel Housewares Clothing Furniture Total costs $ Answer $ Answer $ Answer $ Answer $ Answer

Answer 1

REQ A.
SCHEDULE SHOWING OVERHEADS ALLOCATION
			PERSONNEL	PAYROLL	HOUSEWARES	CLOTHING	FURNITURE
Number of employees				2	8	14	3
Percentage Allocation				7.41%	29.63%	51.85%	11.11%
(Number of employees /Total number)
% of Cost off Personnel deptt to payroll s 7.41%
Req B:
SCHEDULE SHOWING OVERHEADS ALLOCATION
			PERSONNEL	PAYROLL	HOUSEWARES	CLOTHING	FURNITURE
Gross Payroll			0	0	10800	17200	8500
Percentage Allocation			0.00%		29.59%	47.12%	23.29%
(Number of employees /Total number)
% of Cost off Payroll deptt to personnel is 0%
OVERHEHAD ALOCATION SUMMARY
			PERSONNEL	PAYROLL	HOUSEWARES	CLOTHING	FURNITURE
Overheads cost			7300	3800	12300	20000	15650
Personnel Deptt oh			-7300	541	2163	3785	811
(in 7.41:29.63:51.85:11.11)
Payroll Deptt			0	-4341	1285	2045	1011
(in 29.59:47.12:23.29))
Total Overheads			0	0	15748	25830	17472