Question

Service Department Charges and Activity Bases Harold 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 April. CCS Service Category Activity Base Budgeted Cost Budgeted Activity Base Quantity Help desk Number of calls $104,120 3,800 Network center Number of devices monitored 501,200 8,950 Electronic mail Number of user accounts 65,000 6,500 Local voice support Number of phone extensions 134,400 8,400 One of the profit centers for Harold Corporation is the Communication Systems (COMM) sector. Assume the following information for the COMM sector: The sector has 5,000 employees, of whom 60% are office employees. All the office employees have a phone, 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 April was 1 call per individual with a computer. There are 220 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 April. Round your answers to two decimal places. CCS Service Category Service Charge Rate Help desk $ SelectPer callPer device monitoredPer e-mail accountPer employeePer phone extensionItem 2 Network center $ SelectPer callPer device monitoredPer e-mail accountPer employeePer phone extensionItem 4 Electronic mail $ SelectPer callPer device monitoredPer e-mail accountPer employeePer phone extensionItem 6 Local voice support $ SelectPer callPer device monitoredPer e-mail accountPer employeePer phone extensionItem 8 b. Determine the charges to the COMM sector for the four CCS service categories for April. April charges to the COMM sector: Help desk charge $ Network center charge $ Electronic mail charge $ Local voice support charge $

Answer 1

In COMM Sector
CCS Service catogery	Activity Base	Qty Used for COMM of Activity Base (a)	Basis for Calculation (Please refer working 2 below)	Budgeted Rate (As per working 1) (b)	Charges to COMM Sector (a*b)
Help desk	Number of calls	2400	Note 6	27.40	65,760.00
Network center	Number of devices monitored	2620	Note 7	56.00	1,46,720.00
Electronic mail	Number of user accounts	2280	Note 5	10.00	22,800.00
Local voice support	Number of phone extensions	3000	Note 3	16.00	48,000.00

Working 1 :- Calculation of Budgeted Rate
CCS Service catogery	Activity Base	Budgeted Cost	Budgeted Activity (Base Qty)	Budgeted Rate per Activity Base
Help desk	Number of calls	104120	3,800	27.40
Network center	Number of devices monitored	5,01,200	8,950	56.00
Electronic mail	Number of user accounts	65,000	6,500	10.00
Local voice support	Number of phone extensions	1,34,400	8,400	16.00

Working 2
Componenet	Nos	Logic as given in question	Note No.
Total No of Employees	5000		Note 1
Office Employees	3000	60% of Total Employees	Note 2
Office Employees with Phone	3000	All office employees	Note 3
Office Employees with Computer	2400	80% of office employees	Note 4
Employees with Email Account	2280	95% of employees with computer	Note 5
Calls in April Month	2400	1 call per person with Computer	Note 6
No. of Device monitored	2620	No. of computers (i.e. 2400) + 220	Note 7