Tele-Call Center handles all of the customer service for an online clothing retailer.
The managers would like to have a better understanding of the costs of handling new orders versus the cost to process customer questions and complaints. The accountant has gathered the following information. Over the last year of operations, November had the largest number of calls answered (3,000 calls, totaling approximately 38,400 minutes), and employees appeared to be able to handle all of the calls without too much stress. Therefore, the accountant decides to use the number of calls handled in November as an estimate for practical capacity. Five employees worked 8 hours per day in November, for a total of 800 hours (5 employees x 8 hours per day x 20 days). Their monthly salaries total $9,600.
The call supervisor estimates that the average time spent on a new order is 10 minutes, and the average time to handle a question/complaint is 15 minutes. Questions/complaints take more time because details of the order need to be verified, and sometimes the supervisor becomes involved.

A. Calculate the cost per minute using November as the denominator volume.
B. Calculate the time-driven activity cost driver rate for taking a new order and for handling a customer question/complaint.
C. Estimate the cost of taking orders and handling questions/complaints for the next month when 2,000 new orders and 500 question/complaint calls are expected.
D. Estimate the cost of unused capacity for next month.

  • CreatedJanuary 26, 2015
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