At Deutschland Electronics,product Lines Are Charged for Call Center Overhead

question 89

Essay

At Deutschland Electronics,product lines are charged for call center overhead costs based on sales revenue.Last year's summary of call center operations revealed the following:

Deutschland Electronics currently allocates call center overhead costs using a rate of 0.5% of sales revenue.
a. Compute the amount of call center overhead costs allocated to each product line under the current system.
b. Assume Deutschland decides to use the average call length for information to assign last year's overhead costs.Does this allocation method seem more appropriate than percentage of sales? Why or why not?
c. Assume Deutschland decides to use the numbers of calls of both types to assign last year's overhead costs of $65,000. Compute the amount of call center overhead costs assigned to each product line under this revised ABC system.
d. Deutschland Electronics assigns bonuses based on departmental profits.How might the Specialty Products manager try to obtain higher profits for next year if overhead costs are assigned based on the average call length for information?
e.Discuss the barriers for implementing ABC for this call center.

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Definitions:

Cognitive-Social Theorists

Scholars and psychologists who study how cognitive processes and social contexts influence behavior, thoughts, and emotions.

Internal Locus of Control

Refers to the belief that one has control over their own life and outcomes rather than external forces.

Traits

Characteristics or qualities that form an individual's personality, which are typically considered to be relatively stable over time.

Erikson's Theory

A theory of psychological development created by Erik Erikson, which outlines eight stages of human development, each characterized by a specific conflict that contributes to a person's growth.