Astro'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 retail division are:
A) $0.
B) $31,200.
C) $118,560.
D) $193,440.
E) $203,000.

Question

Quizplus · Accepted Answer

First, we need to find the total cost per call by dividing the total cost ($312,000) by the total number of calls (10,000):
Total cost per call = $312,000 / 10,000 = $31.20
Next, we need to allocate the costs for the retail division. Since we know that 3,800 calls were for the wholesale division, the remaining number of calls for the retail division is:
10,000 - 3,800 = 6,200
Multiplying the number of calls for retail by the cost per call gives us the answer:
Retail division costs = 6,200 x $31.20 = $193,440
Therefore, the answer is D: $193,440.

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