Question

Leas 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 25,000 calls in a month, the costs of operating the helpline total $452,500.
To the nearest whole dollar, what should be the total cost of operating the helpline costs at a volume of 23,900 calls in a month? (Assume that this call volume is within the relevant range.)

a. $442,545
b. $452,500
c. $473,326
d. $432,590

Answer 1

Answer:

d. $432,590

Explanation:

In this scenario cost varies with volume of calls. This is called variable cost and is defined as cost that changes as the quantity of goods and services changes. Variable cost is a summation of all the marginal costs of units produced. They rise as production increases and vice versa.

To calculate the variable cost= Total cost/ volume

Variable cost= 452,500/25,000

Variable cost= $18.10

At a new volume of $23,900

Total cost= Variable cost * Volume

Total cost= 18.1* 23,900

Total cost= $432,590