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Digital Communications Inc Encoder Device Division Case Solution

Solution Id Length Case Author Case Publisher
1503 305 Words (2 Pages) Shannon Weems Harvard Business School : 189083
This solution includes: A Word File A Word File and An Excel File An Excel File

As the total information services, the cost that incurs in the year is $2,738,860. The amount of expense calculated for the support function is $864,110. This amount when divided by the per hour service rate. It gives the total amount per hour basis that Rebecca is willing to pay to an outside provider to duplicate the level of service currently provided in house.

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Case Analysis for Digital Communications Inc Encoder Device Division

Question 1

The objective of this question is to calculate the total cost that incurred to make replacement subsidiaries. The cost is calculated by adding the direct and indirect cost of the replacement subsidiaries. The direct cost includes the material cost, labor wages, production and general support wages and material support. The indirect cost is related to the support function on the basis of which the overhead cost is allocated. The indirect cost includes the finance function cost, information services cost, personnel, PLT Engineering. As the percentage of the division of expense in case of VRE is 31.55% which means that this % will be used to calculated the portion of the overhead cost that must be allocated to the replacement subsidiaries. The direct cost comes out to be around $7 million, and indirect cost comes out to be around $3 Million. The total cost comes out to be $10 Million. Rebecca should suggest this cost to the company management.

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