Question
Hi. I can't figure out this problem. Can someone please help. thank you. Market Makers Inc. (MMI) provides a range of services to its retail
Hi. I can't figure out this problem. Can someone please help. thank you. Market Makers Inc. (MMI) provides a range of services to its retail clientscustomer service for inquiries, order taking, credit checking for new customers, and a variety of related services. Auto Supermarket (AS) is a large auto dealer that provides financing for the autos and trucks that it sells. AS has approached MMI to manage the inquiries that come in regarding these loans. AS is not satisfied with the performance of the call center it currently uses for handling inquiries on these loans and is considering a change to MMI. MMI has been asked to estimate the cost of providing the service for the coming year. There are two types of loans at AS, one for autos and SUVs and another for light trucks. The loans for auto and truck buyers typically have different types of customers and loan terms, so the nature and volume of the inquiries are expected to differ. MMI would use its own call center to handle the AS engagement. The MMI call centers annual costs are as follows: Call center costs Salaries $ 4,163,555 Utilities 2,427,446 Leasing of facilities 1,925,513 Other expenses 813,036 $ 9,329,550 MMIs call center is staffed 12 hours per day with 60 call staff always available. Each staff member has a paid 10-minute break for each hour worked, and an unpaid 1-hour break for a lunch/dinner during each 12-hour shift. Thus, the call center has 12,045,000 minutes (11 hr 50 min 60 staff 365 days) available for calls during the year. AS and MMI work together to estimate the number of calls and time required for each call, based on ASs prior experience with its current call center. Inquiries Total Calls Answered Average Number of Minutes/Call Total Time (minutes) Inquire re: rates and terms Autos 79,400 6 476,400 Trucks 31,400 7 219,800 Inquire re: loan application status Autos 44,400 5 222,000 Trucks 6,690 11 73,590 Inquire re: payment status Autos 38,400 3 115,200 Trucks 11,400 4 45,600 Inquire re: other matters Autos 28,400 11 312,400 Trucks 8,440 15 126,600 1,591,590 Required: 1. Determine the amount that MMI should propose to charge AS for the coming year using TDABC, assuming MMI desires a profit of 25% of incurred cost. 2. Suppose that AS wants the proposal broken down by type of loan (auto, truck). What would the proposal look like now?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started