Ex 24-3 Service department charges and activity bases

For each of the following service departments, identify an activity base that could be used for charging the expense to the profit center.
a. Legal
b. Duplication services
c. Electronic data processing
d. Central purchasing
e. Telecommunications
f. Accounts receivable


Answer:
Expense.                                     | Activity Bases
a. Legal                                       | Number of hours
b. Duplication services               | Number of pages
c. Electronic data processing      | Central processing unit (CPU) time, number of printed pages, amount of memory usage
d. Central purchasing                  | Number of requisitions, number of purchase orders
e. Telecommunications               | Number of lines, number of minutes        
f. Accounts receivable                | Number of invoices, number of customers