Varney Corporation, a manufacturer of electronics and communications systems, allocates Computing and Communications Services Department (CCS) costs to profit centers. The following table lists the types of services and cost drivers for each service. The table also includes the budgeted cost and quantity for each service for August.CCS ServicesCost DriversBudgeted CostBudgeted Quantityof ServicesHelp deskNumber of calls$90,000 3,600 Network centerNumber of devices120,000 1,500 Electronic mailNumber of user accounts160,000 5,000 Smartphone supportNumber of smartphones issued72,000 4,000 One of the profit centers for Varney Corporation is the Communication Systems (COMM) division. Assume the following information for COMM:COMM has 2,500 employees, of whom 20% are office employees.All of the office employees have been issued a smartphone, and 95% of them have a computer on the network.One hundred percent of the employees with a computer also have an email account.The average number of help desk calls for August was 0.6 call per individual with a computer.There are 400 additional printers, servers, and peripherals on the network beyond the personal computers.a. Compute the service allocation rate for each of CCS’s services for August.CCS Service CategoryService Charge Rate Help desk$fill in the blank 1 Per call Network center$fill in the blank 3 Per device monitored Electronic mail$fill in the blank 5 Per user or e-mail account Smartphone support$fill in the blank 7 Per smartphone issued b. Compute the allocation of CCS’s services to COMM for August.

Answered: Varney Corporation, a manufacturer of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Varney Corporation, a manufacturer of electronics and communications systems, allocates Computing and Communications Services Department (CCS) costs to profit centers. The following table lists the types of services and cost drivers for each service. The table also includes the budgeted cost and quantity for each service for August.

CCS Services	Cost Drivers	Budgeted Cost	Budgeted Quantity of Services
Help desk	Number of calls	$90,000		3,600
Network center	Number of devices	120,000		1,500
Electronic mail	Number of user accounts	160,000		5,000
Smartphone support	Number of smartphones issued	72,000		4,000

One of the profit centers for Varney Corporation is the Communication Systems (COMM) division. Assume the following information for COMM:

COMM has 2,500 employees, of whom 20% are office employees.
All of the office employees have been issued a smartphone, and 95% of them have a computer on the network.
One hundred percent of the employees with a computer also have an email account.
The average number of help desk calls for August was 0.6 call per individual with a computer.
There are 400 additional printers, servers, and peripherals on the network beyond the personal computers.

a. Compute the service allocation rate for each of CCS’s services for August.

CCS Service Category	Service Charge Rate
Help desk	$fill in the blank 1 Per call
Network center	$fill in the blank 3 Per device monitored
Electronic mail	$fill in the blank 5 Per user or e-mail account
Smartphone support	$fill in the blank 7 Per smartphone issued

b. Compute the allocation of CCS’s services to COMM for August.

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