Baxter customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company's wholesale operation; the remainder was for the retail division. Costs allocated to the retail division are:
A) $0.
B) $31,200.
C) $118,560.
D) $193,440.
E) $203,000.

Question

Quizplus · Accepted Answer

The total cost of calls is $312,000 for 10,000 calls, which means each call costs $31.20 ($312,000 / 10,000). Since 3,800 calls were for the wholesale operation, the remaining 6,200 calls (10,000 - 3,800) were for the retail division. Therefore, the cost allocated to the retail division is 6,200 calls * $31.20 per call = $193,440.

Baxter Customer Service Department Follows Up on Customer Complaints by Telephone