Answer:
The customer service department of D.I. in incorporation asked the publication dept. which is follow dept, the same organization to prepare a brochure for a training program purpose. The publication dept charged 25% money than outside printing agency to customer service dept to compensate the drop in demand for it services.
The cost of the brochure should be legally transferred to the customer service dept, but its head cannot be made responsible for the excess cost. The service dept, head acted and proceeded according to the legal frame work of the co. It is preferable to extents the work to the internal printing division as it helps and fetch the printing division to earn revenue and meet the basic expenditure instead of letting the company's wealth flow to outsiders.
Recommended changes in the company's policy:
The work charge towards internal division must not more than market price as it may produce Imbalances. Alternations must be made which aide publications dept to earn more profits.
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Answer:
Activity base
An activity base is a metaphor in measuring the services performed by each service center of a company.
Example Production department is a service center and the activity base measurement is number of products manufactured during a given period.
The following service departments are identified with their related activity base to charge expenses to the profit center
The above activity base of each service center helps in identifying the expenses related the service centers.
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