City Inspections has three departments using the services of the Payroll Department. Total monthly payroll shared cost is $20,000. The Annual inspections department has 5 employees that make 20 requests. The Emergency services department has 8 employees that make 50 requests. The Roads Division has 7 employees that make 30 requests. Which is the best method to allocate shared payroll costs?

Question

Quizplus · Accepted Answer

The best methods to allocate shared payroll costs in this scenario are either by the number of employees or the number of employee requests. Both methods directly relate to the services provided by the Payroll Department to each department, making them fair measures for cost allocation. Operating income does not directly relate to payroll service usage.

City Inspections Has Three Departments Using the Services of the Payroll