(Levels of costs) Three clients (A, B, and C) use Kingsley Call Service’s call center. During October, Kingsley initiated four new equipment advancements. The following information indicates the cost and benefits of each service:
|
Service Type |
Cost |
Benefits Client |
Estimated Calls Benefitted |
|
Service #359 |
$ 5,810 |
A |
7,000 |
|
Service #360 |
7,085 |
A and |
2,200 |
|
|
B |
4,300 |
|
|
Service #361 |
3,198 |
C |
1,300 |
|
Service #362 |
4,887 |
C |
2,700 |
|
$20,980 |
|
17,500 |
a. If the total cost of new equipment is allocated to all units benefitted, what is the cost per unit and total cost allocated to each client? (Round to the nearest cent.)
b. If the cost of new equipment is allocated to clients benefitted, what is the cost per client and the cost per call benefitted?
c. Assume that Kingsley Call Service charges the costs to the clients as indicated in (b).Client A estimates that a total of 30,000 calls will be processed by Kingsley over the life of the equipment advances. How should Client A allocate the new costs to its callers?