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Service Department Charges and Activity Bases Middler Corporation, a manufacturer of electronics and communications systems, uses...

Service Department Charges and Activity Bases

Middler Corporation, a manufacturer of electronics and communications systems, uses a service department charge system to charge profit centers with Computing and Communications Services (CCS) service department costs. The following table identifies an abbreviated list of service categories and activity bases used by the CCS department. The table also includes some assumed cost and activity base quantity information for each service for October.

CCS Service
Category
Activity Base
Budgeted Cost		 Budgeted Activity
Base Quantity
Help desk Number of calls $78,890 2,300
Network center Number of devices monitored 573,000 9,550
Electronic mail Number of user accounts 66,500 6,650
Smartphone support Number of smartphones issued 144,000 9,000

One of the profit centers for Middler Corporation is the Communication Systems (COMM) sector. Assume the following information for the COMM sector:

• The sector has 5,000 employees, of whom 50% are office employees.

• All the office employees have been issued a smartphone, and 80% of them have a computer on the network.

• 95 percent of the employees with a computer also have an e-mail account.

• The average number of help desk calls for October was 1 call per individual with a computer.

• There are 230 additional printers, servers, and peripherals on the network beyond the personal computers.

a. Determine the service charge rate for the four CCS service categories for October. Round your answers to two decimal places.

CCS Service Category Service Charge Rate
Help desk $  
Network center $  
Electronic mail $  
Smartphone support $  

b. Determine the charges to the COMM sector for the four CCS service categories for October. Round your answers to the nearest dollar amount.

October charges to the COMM sector:
Help desk charge $
Network center charge $
Electronic mail charge $
Smartphone support charge $

Solutions

Expert Solution

Answer:
A)

CCS Service Category Service Charge Rate
Help desk 34.3
Network center 60
Electronic mail 10
Smartphone support 16

b)

Total Employees 5000
Office Employees 2500
Office Employees with Smart Phone 2500
Office Employees with Computers 2125
Office Employees with Email Facility 2019
Avg. Help Desk Calls for Oct 1 Call per Individual with Computer
Total no of Help Desk Calls 2125

October charges to the COMM sector:

 Service Rates No of Services Availed in Oct Service Charge for Oct
Help desk charge $         34.30 2125 $                   72,887.50
Network center charge $         60.00 2355 $                1,41,300.00
Electronic mail charge $         10.00 2019 $                   20,187.50
Smartphone support charge $         16.00 2500 $                   40,000.00

ekkarill92 answered 2 months ago
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