April 2000
IM218 :INFORMATION MANAGEMENT

QUESTION 5

Total Marks: 15 Marks

Click here to access other questions

Click to access
SUGGESTED SOLUTIONS
for Question 5

A data centre is about to establish a database service,to help other departments with accounting and financial data processing:
•the resource costs of the data centre are currently $80,000 a year
•it will cost an additional $20,000 a year,in resource costs,to provide the database
service
•the non-resource costs (overheads)for the data centre are currently $25,000 a year
•the database service can be provided without adding to the non-resource costs
(overheads)of the data centre
•it is expected that the database service will be used for 2,500 hours in each working year
•the same service could easily be provided for 5,000 hours in each year,without
adding to the resource or non-resource costs.
The data centre wishes to charge other departments for using the services of the database consultancy service.


(a)Calculate a suitable unit rate for the database service,based on expected use,taking non-resource costs (overheads)into account.Explain all of your working.[9 marks ]


(b)Suggest two reasons why it might be felt appropriate to set a lower unit rate for the use of the database service.[2 marks ]


(c)State how a lower unit rate might be determined,and calculate a suitable value.
Explain all of your working.[4 marks ]