Question

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 were for the retail division. Costs allocated to the wholesale operation are:

$0.

$31,200.

$118,560.

$193,440.

$203,000.

Answer 1

Answer:

$118,560

Explanation:

Given that,

Total Cost  = $312,000

Total number of calls made = 10,000

Therefore,

Cost per call = Total Cost ÷ Total number of calls made

                     = $312,000 ÷ 10,000

                     = $31.2 per call

Hence,

Cost Allocated to Wholesale Operation:

= Calls Made to Wholesale operation × Cost per call

= 3,800 × $31.2 per call

= $118,560