Business Case Studies & Business Publications

Xyberspace Consulting, Inc.

Lynch, Luann J., G...

Case

Xyberspace Consulting, Inc.

Lynch, Luann J.; Galinsky, Robert

C-2152 | Published November 15, 2000 | 10 pages Case

Collection: Darden School of Business

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Xyberspace Consulting, Inc. is reconsidering the allocation of the costs associated with its Training and Educational Services Group (TESG), a shared-services or support department to its user departments. Currently, the company uses a single departmental rate to allocate actual training costs to the user groups, using the user groups' actual usage of TESG resources. The company is exploring whether it should allocate TESG fixed and variable costs separately, whether it should use budgeted or actual allocation rates and whether it should allocate costs based on budgeted or actual usage. This case is intended to give students exposure to allocating shared-services or support-department costs, understanding the implications of different allocation strategies, and evaluating whether and how allocation systems can facilitate strategy implementation.

1. Allocating shared-services, or support, department costs 2. Understanding the implications of different allocation strategies 3. Evaluating whether and how allocation systems can facilitate strategy implementation