At Deutschland Electronics,product Lines Are Charged for Call Centre Support

question 210

Essay

At Deutschland Electronics,product lines are charged for call centre support costs based on sales revenue.Last year's summary of call centre operations revealed the following:
$$\begin{array} { l r r } & \text { Surveillance Products } & \text { Specialty Products } \\\text { Number of calls for information } & 1000 & 4000 \\\text { Average call length for information } & 3 \text { minutes } & 8 \text { minutes } \\\text { Number of calls for warranties } & 300 & 1200 \\\text { Average call length for warranties } & 7 \text { minutes } & 15 \text { minutes } \\\text { Sales revenue } & \$ 8000000 & \$ 5000000\end{array}$$
Deutschland Electronics currently allocates call centre support costs using a rate of 0.5% of sales revenue.
Required:
a.Compute the amount of call centre support 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 support 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 for information and for warranties to assign last year's support costs of $65 000.Compute the amount of call centre support 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 support costs are assigned based on the average call length for information?
e.Discuss the barriers for implementing ABC for this call centre.
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Definitions:

Negative Information

Data or facts that portray an unfavorable or adverse situation, condition, or characteristic.

Crisis Management Plan

A crisis management plan is a documented strategy or set of procedures designed to help an organization respond to and manage a sudden and significant negative event.

Communication Efforts

The deliberate actions taken to convey information, ideas, or feelings to others, using various methods or channels to achieve effective communication.

Monitoring The Conversation

The practice of observing and analyzing discussions, especially on social media, to gauge public opinion or sentiment.