A Company Sells and Services Photocopying Machines

question 31

Multiple Choice

A company sells and services photocopying machines. Its sales department sells the machines and consumables, including ink and paper, and its service department provides an after sales service to its customers. The after sales service includes planned maintenance of the machine and repairs in the event of a machine breakdown. Service department customers are charged an amount per copy that differs depending on the size of the machine. The company's existing costing system uses a single overhead rate, based on total sales revenue from copy charges, to charge the cost of the Service Department's support activities to each size of machine. The Service Manager has suggested that the copy charge should more accurately reflect the costs involved. The company's accountant has decided to implement an activity-based costing system and has obtained the following information about the support activities of the service department: 11ec37eb_8ba9_b625_97b9_19c5422953c7__00 Calculate the annual profit per machine for each of the three sizes of machine, using the current basis for charging the costs of support activities to machines.

• A) The profit per machine for the medium machine was: $1276
• B) The profit per machine for the medium machine was: $1376
• C) The profit per machine for the medium machine was: $1350
• D) The profit per machine for the medium machine was: $1250

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Definitions:

Poisson Process

A Poisson process is a statistical process that models the occurrence of random events in a fixed interval of time or space.

Mean Arrival Time

The average time it takes for an entity or set of entities to reach a certain point, commonly used in queueing theory and logistics.

Mean Interarrival Time

The average time between arrivals in a queuing system.

Probabilistic Arrival

A concept where arrivals or occurrences are not deterministic but follow a probability distribution, often used in queuing theory and logistics.