Harold Corporation, a manufacturer of electronics and communications systems, us

Question

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 2,000 employees, of whom 50% are office employees. All the office employees have a phone, and 90% 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. Determine the service charge rate for the four CCS service categories for April. Round your answers to two decimal places.

Explanation / Answer

Part 1)

The service charge is calculated with the use of following table:

__________

Part 2)

The April charges to the Comm Sector are calculated as follows:

Helpdesk Charge = (2,000*50%*90%*1)*40.30 = $36,270

_____

Network Center Charge = ((2,000*50%*90%) + 220)*65.50 = $73,360

_____

Electronic Mail Charge = (2,000*50%*90%*95%)*9 = $7,695

_____

Local Voice Support Charge = (2,000*50%)*14.40 = $14,400

CCS Service Category Budgeted Cost (A) Budgeted Activity Base Quantity (B) Service Charge Rate (A/B) Help Desk 137,020 3,400 $40.30 per call Network Center 618,975 9,450 $65.50 per device monitored Electronic Mail 62,100 6,900 $9.00 per email account Local Voice Support 128,160 8,900 $14.40 per phone extension

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