August 2000
IM218 :INFORMATION MANAGEMENT

QUESTION 3

Total Marks: 15 Marks

• Question 1
• Question 2
• Question 4
• Question 5
• Cover Page

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SUGGESTED SOLUTIONS
for Question 3

A data centre provides a number of facilities and services:
•total data centre costs are $40,000 per month,
•of this,resource costs are $20,000 per month.
Part of these costs are due to the large-format printing service that the centre offers.This service allows users to print on photo paper or plain paper at size A0.
The resource costs of printing,per page,are as follows:
•photo paper costs $12 per page
•plain paper costs $3 per page
The cost of maintenance and depreciation for the printer is $100 per month.Each month,the centre prints 200 pages on photo paper and 500 pages on plain paper.

(a)What is the resource (non-overhead)cost of the printing service,per month?[3 marks ]

(b)What percentage of the total non-overhead costs does this represent?[1 mark ]

(c)What contribution should the printing service be expected to make to the total costs (resource +overheads)of the centre?[2 marks ]

(d)How much would you charge a user of the service,per page,for printing on
(i)photo paper?
(ii)plain paper?
You may assume that proportion of the charge due to overheads is the same for both types of paper .[4 marks ]

(e)The printing service could print and deliver up to 1400 pages a month using existing resources,regardless of paper type.In this case,the cost of maintenance and depreciation would double to $200 per month.
If 1400 pages were printed each month,what is the lowest unit rate,for each paper type, which would guarantee that the existing contribution to non-overhead resources is maintained?
You may assume that proportion of the charge due to overheads is the same for both types of paper,and that the ratio of photo paper usage to plain paper usage remains the same as before . [5 marks ]