Reference no: EM13876188

Design of Strategic Business Unit MetroBank is a fast-growing bank that serves the region around Jacksonville, Florida. The bank provides commercial and individual banking services, including investment and mortgage banking services. The firm's strategy is to continue to grow by acquiring smaller banks in the area to broaden the base and variety of services it can offer. The bank now has 87 strategic business units, which represent different areas of service in different locations. To sup- port its growth, MetroBank has invested several million dollars in upgrading its information serv- ices function. The number of networked computers and of support personnel has more than doubled in the last four years and now accounts for 13 percent of total operating expenses. Two years ago, MetroBank decided to charge information services to the SBUs based on the head count (number of employees) in each SBU. Recently, some of the larger SBUs have complained that this method overcharges them and that some of the smaller SBUs are actually using a larger share of the total information services resources. MetroBank's controller has decided to investigate these complaints. His inquiry of the director of the information services department revealed that the larger depart- ments generally use more services, but some small departments in fact kept him pretty busy. Based on this response, the controller is considering changing the charges for information services to the basis of actual service calls in each SBU rather than the head count.

Required: Is the information services department at MetroBank a profit center or a cost center? Which type of unit should it be, and why? Also, evaluate the controller's decision regarding the basis for charging information services costs to the SBUs.