Alaina's 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 wholesale operation are:
A) $0.
B) $31,200.
C) $118,560.
D) $193,440.
E) $203,000.

Question

Quizplus · Accepted Answer

To allocate the costs of the customer service department to the wholesale operation, we need to know what proportion of the total calls were made for the wholesale operation. According to the problem, out of the 10,000 calls, 3,800 were for the wholesale operation. This means that the proportion of calls for the wholesale operation is:

3,800 / 10,000 = 0.38

To allocate the costs to the wholesale operation, we need to multiply the total costs by this proportion:

$312,000 * 0.38 = $118,560

Therefore, the costs allocated to the wholesale operation are $118,560. The correct answer is C.

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