Off-site storage of duplicate copies of critical files protects them from a fire or other disaster at the computing facility. The procedure is part of an overall disaster recovery plan. An automobile and personal property insurer has decentralized its information processing to the extent that headquarters has less processing capacity than any of its regional processing centers. These centers are responsible for initiating policies, communicating with policyholders, and adjusting claims. The company uses leased lines from a national telecommunications company. Initially, the company thought there would be little need for interregion communication, but that has not been the case. The company underestimated the number of customers that would move between regions and the number of customers with claims arising from accidents outside their regions. The company has a regional center in an earthquake-prone area and is planning how to continue processing if that center, or any other single center, were unable to perform its processing.

The beginning balance of gross accounts receivable (A/R) was US $5.000debit). Thus net beginning A/R was US $4,500$5,000 - $660 credit in the allowance for bad debts. The allowance was credited for the US $2,000 bad debt expense. Accordingly, the ending allowance credit) was US $1 .500$500 - $1.000 write-off - $2,000)_ CT...9n a US $30.000 increase net A/R. ending net A/R must have been US $34,500$4,500 beginning net A/R T $30,000), with ending gross ,4/R of US $36,000$34,500 + $1,500). Collections were therefore US $68.000$5,000 beginning gross A/R - $1.000 write-off T $100,000

From the seller's perspective, the price should reflect at least its incremental cash outflow outlay cost) plus the contribution from an outside sale opportunity cost). Because A has idle capacity, the opportunity cost is O. Thus, the minimum price Division A should charge Division B. is US $7.00.