Support Department Allocations And Cost Drivers

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 $25
Network center $80
Electronic mai $32
Smartphone support $18


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

August charges to the COMM sector :

Help desk charge $
Network center charge $
Electronic mail charge $
Smartphone support charge $