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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Service department charges and activity bases
Harris 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 February.
One of the profit centers for Harris Corporation is the Electronics Systems sector. Assume the following information for the Electronics sector:
• The sector has 2.000 employees, of whom 60% are office employees.
•All the office employees have a phone, and all of them have a computer on the network.
• Ninety-five percent of the employees with a computer also have an e-mail account.
•The average number of help desk calls for February was 0.45 call per individual with a computer.
•There are 80 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 February.
b.Determine the charges to the Electronics sector for the four CCS service categories for February.

To determine

(a)

Concept Introduction:

The service charges are those charges at which the services are provided to the party. The department service charges are those charges at which the services are provided to each department.

To find out:

The service charge rate for each category for february.

Explanation

The formula for computing the service charge rates is as follows:

  Service Department Charges=Service Department ExpensesTotal Service Department Usage

H.C.

    <
    ParticularsAssumed Cost
      (a)
      ($)
    Assumed activity based quantity
      (b)
    Charge Rate
      (c)=(a)(b)
      ($)
    Help Desk  135,000
To determine

(b)

Concept Introduction:

The service charges are those charges at which the services are provided to the party. The department service charges are those charges at which the services are provided to each department.

To find out:

The service charges to the electronics system for each category for february.

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