Paying for the Data Processing Department

Two approaches exist for budgeting data processing costs: the overhead approach and the chargeback approach. Overhead is the typical way in which other internal support departments are paid. The sales department's cost is paid for by goods sold (the commissions are commensurate with the sales). The engineering department's costs are paid for by breakthroughs made and eventually sold to the public. Unlike engineering and sales, the data processing department fits an internal niche, somewhat like the payroll department, in that it does nothing to generate outside revenue.

Understanding the Overhead Approach

Most internal support departments such as DP are paid for with overhead funds. That is, each department's ...

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