(Cost allocations) Consider the case of the company that is decentrally organized into five operating divisions. The company pays $150,000 annually to subscribe to the Economic Facts and Projections Hotline (EFPH). This hotline is available via a computer link to all five of the division managers and provides sophisticated information about the U.S. and world economies, demand projections for various industries, interest rate forecasts, and so on, as requested by clients. The com¬ pany’s contract with EFPH specifies that only one division at a time may main¬ tain a computer link with EFPFI. Thus, while one division is using the service, other divisions are precluded from using the service. T he entire $150,000 cost to subscribe to the service is fixed; there are no variable costs associated with this contract. Write a memo to the company president discussing what consid¬ erations should be taken into account in designing a system to allocate the costs of the EFPH contract to the five operating divisions.

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