Question
Cindy Liverly is the corporate director of marketing for the Rhodes hotel chain. Rhodes operates upscale properties in five major cities. Each property contributes to
Cindy Liverly is the corporate director of marketing for the Rhodes hotel chain. Rhodes operates upscale properties in five major cities. Each property contributes to the cost of employing the corporate director of marketing as well as the newly appointed corporate revenue manager. The question for Cindy is how to fairly allocate the costs of operating the corporate marketing department. One of the hotel general managers thinks the fairest way to do so is by having each property pay an equal share of the costs. Another feels the costs should be allocated based upon the property's size. Yet another general manager feels that rooms sold, not size, should dictate the proportion to be paid. Cindy's boss has even asked her to investigate allocation based upon the profits made by each hotel. Using the information below, help Cindy with her costallocation decision by answering the questions that follow.
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