Middler Corporation, a manufacturer of electronics and communications systems, uses a service department charge system to...

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	$151,640	3,400
Network center	Number of devices monitored	610,500	9,250
Electronic mail	Number of user accounts	64,800	7,200
Smartphone support	Number of smartphones issued	125,280	8,700

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 3,000 employees, of whom 40% are office employees.

• All the office employees have been issued a smartphone, 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 October 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 October. Round your answers to two decimal places.

CCS Service Category	Service Charge Rate
Help desk	$
Network center	$
Electronic mail	$
Smartphone support	$

b. Determine the charges to the COMM sector for the four CCS service categories for October. Round your answers to the nearest dollar amount.

October charges to the COMM sector:
Help desk charge	$
Network center charge	$
Electronic mail charge	$
Smartphone support charge	$

 · Answer

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  $151,640.00  Number of Calls  3400  $44.60    Network Center  $610,500.00  Number of devices monitored  9250  $66.00    Electronic Email  $64,800.00  Number of user accounts  7200  $9.00    Smartphone support  $125,280.00 Nos of smartphones issued  8700  $14.40    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  3000*40%*90%*1  1080  $44.60  $48,168.00    Network Center  Number of devices monitored  (3000*40%*90%)+300  1380  $66.00  $91,080.00    Electronic Email  Number of user accounts  3000*40%*90%*95%  1026  $9.00  $9,234.00    Smartphone support Nos of smartphones issued  3000*40%  1200  $14.40  $17,280.00   .

Middler Corporation, a manufacturer of electronics and communications systems, uses a service department charge system to...

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Computation of Service Charge rate for CCS department - Middler Corporation
CCS Service Category	Budgeted Cost	Activity Base	Usage of Activity Base	Activity Rate
CCS Service Category	Budgeted Cost	Activity Base	Usage of Activity Base	Activity Rate	Help Desk	$151,640.00	Number of Calls	3400	$44.60
Network Center	$610,500.00	Number of devices monitored	9250	$66.00
Electronic Email	$64,800.00	Number of user accounts	7200	$9.00
Smartphone support	$125,280.00	Nos of smartphones issued	8700	$14.40

October charges to COMM sector
CCS Service Category	Activity base	Quanity of activity Base		Activity Rate	Allocated charges
CCS Service Category	Activity base	Details	Quantity	Activity Rate	Allocated charges
Help Desk	Number of Calls	300040%90%*1	1080	$44.60	$48,168.00
Network Center	Number of devices monitored	(300040%90%)+300	1380	$66.00	$91,080.00
Electronic Email	Number of user accounts	300040%90%*95%	1026	$9.00	$9,234.00
Smartphone support	Nos of smartphones issued	3000*40%	1200	$14.40	$17,280.00