Service Department Charges and Activity Bases Harold Corporation, a manufacturer
ID: 2511318 • Letter: S
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.
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.
b. Determine the charges to the COMM sector for the four CCS service categories for April.
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 ServiceCategory
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 8b. 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 $Explanation / Answer
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
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