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 Budgeted Activity Category Activity Base Budgeted Cost Base Quantity Help desk Number of calls $99,060 2,600 Network center Number of devices monitored 582,900 Electronic mail Number of user accounts 57,000 5,700 Local voice support Number of phone extensions 131,200 8,200 One of the profit centers for Harold Corporation is the Communication Systems (COMM) sector. Assume the following information for the COMM sector: 8,700 • The sector has 1,000 employees, of whom 40% are office employees • All the office employees have a phone, and 70% of them have a computer on the network • 90 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 300 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 Network center Electronic mail Local voice support 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

Answer 1

Solution a:

Computation of Service Charge rate for CCS department - Middler Corporation
CCS Service Category	Budgeted Cost	Activity Base	Usage of Activity Base	Activity Rate
					Help Desk	$99,060.00	Number of Calls	2600	$38.10
Network Center	$582,900.00	Number of devices monitored	8700	$67.00
Electronic Email	$57,000.00	Number of user accounts	5700	$10.00
Smartphone Support	$131,200.00	Number of smartphones extension	8200	$16.00

Solution b:

October charges to COMM sector
CCS Service Category	Activity base	Quanity of activity Base		Activity Rate	Allocated charges
		Details	Quantity
Help Desk	Number of Calls	1000*40%*70%*1	280	$38.10	$10,668.00
Network Center	Number of devices monitored	(1000*40%*70%)+300	580	$67.00	$38,860.00
Electronic Email	Number of user accounts	1000*40%*70%*90%	252	$10.00	$2,520.00
Smartphone Support	Number of smartphones extension	1000*40%	400	$16.00	$6,400.00