SkyBlue Airlines operates a centralized computer center for the data-processing needs of its reservations, scheduling, maintenance, and accounting divisions. Costs associated with use of the computer are charged to the individual departments on the basis of time usage. Due to recent increased competition in the airline industry, the company has decided that it is necessary to more accurately allocate its costs to price its services competitively and profitably. During the current period, the use of data-processing services and the storage capacity required for each of the divisions was as follows (in thousands of seconds for time usage and in gigabytes for storage capacity):

Division Time Usage Storage Capacity RESCIVALIONSa eeeee anes 2,500 1,500 SCHOGUIING ea camateeenr e 1,700 600 MaintemanCe era aascecchgy sen 6,300 210 INCOUNMIMAG liaos: scausesbc oasessuncncke e 5,000 190 During this period, the cost of the computer center amounted to $7,050,000 for time usage and

$5,000,000 for storage-related costs.

Required

a. Determine the computer service cost allocations to each division; you may round all decimals to three places. Use:
(1) Asingle cost pool and rate based on time used.
(2) Two cost pools and rates based on time used and capacity used.

b. Write an email memo to management (your instructor) explaining whether to use one or two cost pools and why.