Chapter 9, Problem 6E

Service department charges and activity bases

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.

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 5,200 employees, of whom 25% are office employees.
• All the office employees have been issued a smartphone, and 96% of them have a computer on the network.
• One hundred percent of the employees with a computer also have an e-mail account.
• The average number of help desk calls for October was 1.5 calls per individual with a computer.
• There are 600 additional printers, servers, and peripherals on the network beyond the personal computers.

1. A. Determine the service charge rate for the four CCS service categories for October.
2. B. Determine the charges to the COMM sector for the four CCS service categories for October.