BrightStar, a cable television operator, had 800,000 subscribers in 2015. The company employs eight customer help-desk representatives to respond to customer questions and problems. During 2015, each customer help-desk representative worked eight hours per day for 250 days at a fixed annual salary of $48,000. The company received 72,000 telephone calls from its customers in 2015. Each call took an average of 10 minutes.

Required

1. Do you think customer help-desk costs at BrightStar are engineered costs or discretionary costs? Explain your answer.

2. Calculate the cost of unused customer help-desk capacity in 2015 under each of the following two assumptions:

(a) Customer help-desk costs are engineered costs

(b) Customer help-desk costs are discretionary costs.

3. Assume that BrightStar had 1,020,000 subscribers in 2016 and that the 2015 percentage of telephone calls received to total subscribers continued into 2016. Customer help-desk capacity in 2016 was the same as it was in 2015. Calculate the cost of unused customer help-desk capacity in 2016 under each of the following two assumptions:

(a) Customer-service costs are engineered costs

(b) Customer service costs are discretionary costs.