1)Calculate the unit support cost per policy for new and in-force annuity and life insurance policies using the new allocation bases. In addition, calculate the total support costs to be reported by product for each legal business unit entity.
2)Why would Hampton want to track that information by product even if that level of detail was not required by regulators?
3)Will the new support cost allocation information help Gibson Insurance establish better pricing guidelines for the various annuities and life insurance products sold by each legal business unit entity? Why or why not?
4)Is there room for improvement in the means by which the corporate support costs are allocated under Hampton’s new approach? If yes, in what way(s)? If no, why not?