Market Makers Incorporated (MMI) provides a range of services to its retail clients-customer service for inquiries, order taking, credit checking for new customers, and a variety of related services. Auto Supermarket (AS) is a large auto dealer that provides financing for the autos and trucks that it sells. AS has approached MMI to manage the inquiries that come in regarding these loans. AS is not satisfied with the performance of the call center it currently uses for handling inquiries on these loans and is considering a change to MMI. MMI has been asked to estimate the cost of providing the service for the coming year. There are two types of loans at AS, one for autos and SUVS and another for light trucks. The loans for auto and truck buyers typically have different types of customers and loan terms, so the nature and volume of the inquiries are expected to differ. MMI would use its own call center to handle the AS engagement. The MMI call center's annual costs are as follows: Call center costs $ 4,193,555 2,457,446 1,955,513 816,036 Salaries Utilities Leasing of facilities Other expenses Total $ 9,422,550 MMI's call center is staffed 12 hours per day with 60 call staff always available. Each staff member has a paid 10-minute break for each hour worked, and an unpaid 1-hour break for a lunch/dinner during each 12-hour shift. Thus, the call center has 12,045,000 minutes (11 hr x 50 min x 60 staff x 365 days) available for calls during the year. AS and MMI work together to estimate the number of calls and time required for each call, based on AS's prior experience with its current call center. Average Number of Minutes/Call Total Calls Total Time (minutes) Inquiries Inquire re: rates and terms Answered Autos 79,700 31,700 6. 478,200 221,900 Trucks 7 Inquire re: loan application status 223,500 73,920 Autos 44,700 6,720 Trucks 11 Inquire re: payment status 38,700 11,700 116,100 46,800 Autos Trucks 4 Inquire re: other matters Autos 28,700 11 315,700 127,050 Trucks 8,470 15 1,603,170
Market Makers Incorporated (MMI) provides a range of services to its retail clients-customer service for inquiries, order taking, credit checking for new customers, and a variety of related services. Auto Supermarket (AS) is a large auto dealer that provides financing for the autos and trucks that it sells. AS has approached MMI to manage the inquiries that come in regarding these loans. AS is not satisfied with the performance of the call center it currently uses for handling inquiries on these loans and is considering a change to MMI. MMI has been asked to estimate the cost of providing the service for the coming year. There are two types of loans at AS, one for autos and SUVS and another for light trucks. The loans for auto and truck buyers typically have different types of customers and loan terms, so the nature and volume of the inquiries are expected to differ. MMI would use its own call center to handle the AS engagement. The MMI call center's annual costs are as follows: Call center costs $ 4,193,555 2,457,446 1,955,513 816,036 Salaries Utilities Leasing of facilities Other expenses Total $ 9,422,550 MMI's call center is staffed 12 hours per day with 60 call staff always available. Each staff member has a paid 10-minute break for each hour worked, and an unpaid 1-hour break for a lunch/dinner during each 12-hour shift. Thus, the call center has 12,045,000 minutes (11 hr x 50 min x 60 staff x 365 days) available for calls during the year. AS and MMI work together to estimate the number of calls and time required for each call, based on AS's prior experience with its current call center. Average Number of Minutes/Call Total Calls Total Time (minutes) Inquiries Inquire re: rates and terms Answered Autos 79,700 31,700 6. 478,200 221,900 Trucks 7 Inquire re: loan application status 223,500 73,920 Autos 44,700 6,720 Trucks 11 Inquire re: payment status 38,700 11,700 116,100 46,800 Autos Trucks 4 Inquire re: other matters Autos 28,700 11 315,700 127,050 Trucks 8,470 15 1,603,170
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter6: Process Costing
Section: Chapter Questions
Problem 35P: Hepworth Credit Corporation is a wholly owned subsidiary of a large manufacturer of computers....
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