A Department Store Apportions Payroll Costs to the Various Departments

question 94

Essay

A department store apportions payroll costs to the various departments on the basis of the number of payroll checks issued by each department.Accounting costs are apportioned on the basis of the number of reports generated for each department.The payroll costs for the year were $150,000, and the accounting costs for the year totaled $70,000.The number of payroll checks issued and the number of reports generated for each department are as follows: $$\begin{array} { l c c } & \begin{array} { c } \text { Number of } \\\text { Payroll Checks }\end{array} & \begin{array} { c } \text { Number } \\\text { of Reports }\end{array} \\\text { Department A } & 396 & 60 \\\text { Department B } & 1,278 & 90 \\\text { Department C } & 126 & 150\end{array}$$ ​
Determine the amount of (a) payroll cost and (b) accounting cost to be apportioned to each department.

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Definitions:

Inventory Group Basis

An inventory accounting method that aggregates groups or categories of inventory for valuation purposes, rather than valuing items individually.

LIFO Method

Last In, First Out, an inventory valuation method that assumes goods purchased last are the first to be sold.

Fiscal Year

A one-year period used for financial reporting and budgeting that may not correspond to the calendar year.

Net Realizable Value

The estimated selling price of goods, minus the cost of their sale or completion.