Market Makers Inc. (MMI) provides a range of services to itsretail clients—customer service for inquiries, order taking, creditchecking for new customers, and a variety of related services. AutoSupermarket (AS) is a large auto dealer that provides financing forthe autos and trucks that it sells. AS has approached MMI to managethe inquiries that come in regarding these loans. AS is notsatisfied with the performance of the call center it currently usesfor handling inquiries on these loans and is considering a changeto MMI. MMI has been asked to estimate the cost of providing theservice for the coming year.

There are two types of loans at AS, one for autos and SUVs andanother for light trucks. The loans for auto and truck buyerstypically have different types of customers and loan terms, so thenature and volume of the inquiries are expected to differ. MMIwould use its own call center to handle the AS engagement. The MMIcall center’s annual costs are as follows:

Call center costs
Salaries	$	4,233,555
Utilities		2,497,446
Leasing of facilities		1,995,513
Other expenses		820,036
	$	9,546,550

MMI’s call center is staffed 12 hours per day with 60 call staffalways available. Each staff member has a paid 10-minute break foreach hour worked, and an unpaid 1-hour break for a lunch/dinnerduring each 12-hour shift. Thus, the call center has 12,045,000minutes (11 hr × 50 min × 60 staff × 365 days) available for callsduring the year.

AS and MMI work together to estimate the number of calls andtime required for each call, based on AS’s prior experience withits current call center.

Inquiries	Total Calls Answered				Average Number of Minutes/Call				Total Time (minutes)
Inquire re: rates and terms
Autos		80,100				6				480,600
Trucks		32,100				7				224,700
Inquire re: loan application status
Autos		45,100				5				225,500
Trucks		6,760				11				74,360
Inquire re: payment status
Autos		39,100				3				117,300
Trucks		12,100				4				48,400
Inquire re: other matters
Autos		29,100				11				320,100
Trucks		8,510				15				127,650
										1,618,610

Required:

1. Determine the amount that MMI should propose to charge AS forthe coming year using TDABC, assuming MMI desires a profit of 30%of incurred cost.

2. Suppose that AS wants the proposal broken down by type ofloan (auto, truck). What would the proposal look like now?