Mailroom clerks at Snail Mail are paid a salary of $3200 per month. All clerks are full time. A new clerk is hired whenever the volume of mail increases by 30 000 pieces since the last clerk was hired. If volume of mail is the activity base, mail-handling costs are:

Question

Quizplus · Accepted Answer

The fact that a new clerk is hired whenever the volume of mail increases by 30,000 pieces indicates that the mail-handling costs are step-variable costs. This means that these costs remain fixed at certain levels of mail volume, but increase in steps as the volume of mail reaches certain thresholds that require hiring additional clerks.

Mailroom Clerks at Snail Mail Are Paid a Salary of $3200