Question

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 $96,750 2,500 Network center Number of devices monitored 660,250 9,500 Electronic mail Number of user accounts 71,000 7,100 Handheld technology support Number of handheld devices issued 142,400 8,900 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 2,000 employees, of whom 60% are office employees. Almost all office employees (90%) 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 calls per individual with a computer. There are 290 additional printers, servers, and peripherals on the network beyond the personal computers. All the nonoffice employees have been issued a handheld device. 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 $ Per call Network center $ Per device monitored Electronic mail $ Per user or e-mail account Handheld technology support $ Per device b. Determine the charges to the COMM sector for the four CCS service categories for October. October charges to the COMM sector: Help desk charge $ Network center charge $ Electronic mail charge $ Handheld technology support $

Answer 1

Answer (a):

Service charge rate for the four CCS service categories for October:

Service Charge Rate Help desk per call = Budgeted cost / Budgeted Activity Base Quantity = $96,750 / 2,500 = $38.70

Service Charge Rate Network center Per device monitored = Budgeted cost / Budgeted Activity Base Quantity = 660,250 / 9,500 = $69.50

Service Charge Rate Electronic mail Per user or e-mail account = Budgeted cost / Budgeted Activity Base Quantity = $71,000 / 7100 = $10.00

Service Charge Rate Handheld technology support Per device = Budgeted cost / Budgeted Activity Base Quantity = 142,400 / 8900 = $16.00

As such:

Service charge rate for the four CCS service categories for October:

Help desk =$38.70 per call

Network center = $69.50 Per device monitored

Electronic mail = $10.00 Per user or e-mail account

Handheld technology support = $16.00 Per device

Answer (b):

Charges to the COMM sector for the four CCS service categories for October

Base data:

The sector has 2,000 employees, of whom 60% are office employees.

Office employees = 2000 * 60% = 1200

All office employees (90%) have a computer on the network. 95 percent of the employees with a computer also have an e-mail account

Number of e-mail account = 1200 * 90% * 95% = 1026

All the non-office employees have been issued a handheld device

Number of non-office employees = Total employees - Office employees = 2000 - 1200 = 800

Number of handheld devices = 800

Help desk:

Average number of help desk calls for October was 1 call per individual with a computer:

Number of individuals with computer = 1200 * 90% =1080

Number of help desk calls = 1080 *1 = 1080

Help desk charges = Number of help desk calls * Service Charge Rate Help desk per call = 1080 * $38.70 = $41,796

Network:

There are 290 additional printers, servers, and peripherals on the network beyond the personal computers.

Number of devices = 1080 + 290 = 1370

Network center charge = Number of devices * Service Charge Rate Network center per device monitored

= 1370 * $69.50 = $95,215

Electronic mail :

Electronic mail charge = Number of e-mail account * Service Charge Rate Electronic mail per user or e-mail account = 1026 * $10 =$10,260

Handheld technology support:

Handheld technology support = Number of handheld devices * Service Charge Rate Handheld technology support Per device

= 800 * $16.00 = $12,800

As such:

Help desk charges = $41,796

Network center charge = $95,215

Electronic mail charge = $10,260

Handheld technology support = $12,800