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Accounting

6 Time-Driven Activity-Based Costing (TDABC) in a Call Center Market Makers Inc. (MMI) provides a range of services to its retail clients—customer 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 center’s annual costs are as follows:

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?

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