Mire Corporation staffs a helpline to answer questions from customers. The costs of operating the helpline are variable with respect to the number of calls in a month. At a volume of 29,000 calls in a month, the costs of operating the helpline total $171,100.
-To the nearest whole cent, what should be the average cost of operating the helpline per call at a volume of 27,500 calls in a month? (Assume that this call volume is within the relevant range.)
A) $5.48
B) $5.90
C) $6.22
D) $6.06

Question

Quizplus · Accepted Answer

We can use the formula for variable costs, which is:

Total Cost = Variable Cost per unit x Number of units

We can use this formula to find the variable cost per call at 29,000 calls:

$171,100 = Variable Cost per call x 29,000 calls
Variable Cost per call = $171,100 / 29,000 calls
Variable Cost per call = $5.90

Now we can use this variable cost per call to find the total cost at 27,500 calls:

Total Cost = Variable Cost per call x Number of units
Total Cost = $5.90 x 27,500 calls
Total Cost = $162,250

Finally, we can find the average cost per call:

Average Cost per call = Total Cost / Number of units
Average Cost per call = $162,250 / 27,500 calls
Average Cost per call = $5.90, which to the nearest cent is $5.90.

Therefore, the best choice is B, $5.90.

Mire Corporation Staffs a Helpline to Answer Questions from Customers