Problem:
A department store apportions payroll costs on the basis of the number of payroll checks issued. Accounting costs are apportioned on the basis of the number of reports. The payroll costs for the year were $231,000 and the accounting costs for the year totaled $75,500. The departments and the average cost of store equipment and average cost of inventory for each are as follows:
- Number of Payroll Checks Number of Reports
- Department R 483 70
- Department S 1,470 85
- Department T 147 345
Required:
Question: Determine the amount of (a) payroll cost and (b) accounting cost to be apportioned to each department.
Note: Explain all calculation and formulas.