80.2K

Verified Solution

Link Copied!

Manning Systems is a commercial software vendor that sells billing and other financial software to companies around the globe. Manning operates a centralized call center for customer support calls. Costs associated with use of the center are charged to the division with primary responsibility for the client. There are four geographical divisions: North America $($NA$),$ Central and South America $($SA$),$ Europe, and Asia$-$Pacific $($APAC$).$ The allocation is based on the length of time of calls made $($Minutes$).$ Idle time of the reservation agents and the fixed cost of the equipment are allocated based on the number of calls received $($Calls$)$ from clients in each division. Due to recent increased competition in the commercial software business, Manning has decided that it is necessary to better allocate its costs in order to price its services competitively and profitably. During the most recent period for which data are available, the use of the call center for each division was as follows:

Division Minutes $($Thousands$)$ Calls $($Thousands$)$

Asia$-$Pacific $240180$

Central and South America $480144$

Europe $960432$

North America $7201,044$

During this period, the cost of the call center amounted to $$2,520,000$ for personnel and $$1,950,000$ for equipment and other costs.

Required:

a$-1.$ Determine the allocation to each of the divisions using a single rate based on time used $($minutes$).$

a$-2.$ Determine the allocation to each of the divisions using the dual rates based on time used $($for personnel costs$)$ and number of calls $($for equipment and other costs$).$

Answer & Explanation Solved by verified expert

See Answer