The following discussion occurred between two division managers, Bob and Jalenne, and the chief operating officer, Harry.
Bob: "Jalenne's division has twice as many employees as my division, yet corporate head quarters costs, which include human resource costs, are allocated to our two divisions equally, hurting my bottom line." Jalenne: "You know Bob is right to be upset about the human resource cost allocation. However, the CEO and the CFO devote much more time and attention to Bob's division because it is in financial difficulty. Perhaps we should track consumption of corporate time and allocate the corporate headquarters costs to divisions on the basis of corporate time devoted to each division."
Harry: "In my 25 years working at corporate, I have heard these arguments year after year. Tracking time spent on activities related to divisions would be expensive and nearly impossible for central management. Furthermore, there are many corporate costs that are not related to human time spent on divisional issues. Allocating an equal portion of these costs to each division is the only practical method."
Use your understanding of common and traceable costs to discuss the appropriateness of Harry's response. Is there a method that could be used so that Jalenne and Bob would be less concerned about the allocation of corporate headquarters costs?