Brown's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 9,000 calls and incurred costs of $303,000. If 3,780 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the retail division should amount to:
A)$0.
B)$127,260.
C)$175,740.
D)$219,414.
E)$303,000.

Question

Quizplus · Accepted Answer

To allocate costs to the retail division, we need to calculate the cost per call for each division.

Cost per call for wholesale division = $303,000 / 9,000 calls = $33.67
Number of calls for retail division = 9,000 - 3,780 = 5,220
Cost allocated to retail division = $33.67 x 5,220 = $175,740.

Therefore, the answer is (C) $175,740.

Brown's Customer Service Department Follows Up on Customer Complaints by Telephone