Liberty Credit Checks Produces Two Styles of Credit Reports: Personal

Essay

Liberty Credit Checks produces two styles of credit reports: personal and corporate.The difference between the two is the amount of background information and data collection required.The corporate report uses more skilled personnel because additional checking and data are required.The relevant figures for the year just completed follow: Total support service costs to be allocated are $3,200,000. $$\begin{array} { | l | r | r | } \hline \text { Allocation base } & \text { Indlvidual } & \text { Corporate } \\\hline \text { Data purchased } & \$ 40,000 & \$ 80,000 \\\hline \text { Research hours } & 24,000 & 30,000 \\\hline \text { Interview hours } & 1,000 & 10,000 \\\hline \text { Number of reports } & 16,000 & 3,000 \\\hline\end{array}$$ Required:
(a)Which method would be preferred by each manager? Which method would be least preferred?
(b)Provide arguments that each manager would make for his/her preferred method.How would each manager argue against his/her least preferred method?