<p>I am just curious to know how long, in minutes, does the reporting service take to generate report when it returns 1MB of data. Maybe using views and table is properly index. SSRS reporting  and server side generation.</p>

How long is acceptable? Depends on what it's doing, how much it's run, things like that. Anything below 30 seconds would be fine if it's run once every day or two. If it's run once a week or once a month that number could be a lot higher.