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IT department's budget

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Hardware maintenance is usually provided through a defined service contract negotiated between the organization purchasing the hardware and the vendor selling the hardware. At the heart of the maintenance contract is the response time in which the vendor repairs the issue. This is a major factor in the cost of the maintenance agreement.

Consider the following two policies.

- Setting aside a budget of $100,000 and purchasing a reserve of hardware components and fixing hardware issues with internal staff.
- Purchasing a maintenance contract for $200,000 that guarantees all repair services will be completed in a 4-hour window from the time they are reported.

In your view, which of the two policies listed above would be the most beneficial to an IT department's budget? Explain, indicating the major factors that influenced your policy decision.

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In my opinion, the second option of purchasing a maintenance contract with guarantee or repair within 4 hours will be more beneficial for the company as losses due to downtime is very limited in this case and thus, even though it costs ...

Solution Summary

Which of the policies would be the most beneficial to an IT department's budget?

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Prepare the Production Department's flexible budget performance report for March, including both the activity and spending variances. (Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Omit the "$" sign in your response.)

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Activity Variances Spending Variances
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indirect labor



Equipment depreciation

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Factory administration

Total expense $


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