Brokerage Service, Inc., is a firm that charges a fee to buy and sell investment orders for its clients. The company has three types of service lines: discount brokers, mutual funds, and full-line brokerage services. Prior to fully analyzing an ABC system, indirect costs of servicing and selling were assigned based on the sales dollars of each service line. When the ABC software was used, resources were assigned to three major activity cost pools: customer acquisition, customer servicing, and customer retention.

The following table shows the cost allocation results under both the traditional (sales dollar allocations) and ABC approaches.

For which decisions might the preceding information be useful to the brokerage firm?

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Support Cost Allocations Traditional sales dollars ABC: 3 customer activities Discount Brokers $30,000 $20,000 Mutual Funds $11,000 $9,000 Full-Line Brokerage Services $20,000 $32,000