A real estate agent is considering changing her cell phone plan; there are three

Question

A real estate agent is considering changing her cell phone plan; there are three to chose from - all involve a monthly fee of $20.75 Plan A charges $0.45 per minute for daytime calls and $0.17 per minute for evening calls. Plan B charges $0.57 per minute for daytime calls and $0.19 per minute for evening calls, Plan C has a flat rate of $34 with up to 200 minutes of calls included per month and a charge of $0.38 per minute beyond that, day or evening. If the agent will use the service for daytime calls only, how many minutes per month should she stay below so that Plan A is the least cost alternative?

Explanation / Answer

Solution :

Plan B day time call rate per minute is higher than Plan A rate, therefore Plan A is always at least cost as compared with plan B.

Monthly Fee of $20.75 is irrelevant for decision making as same will be incurred in every plan.

Plan C has a flat rate of $34 up to 200 minutes of calls included per month.

Nos of minute calls plan A can made in day time with in range of $34 = $34 / $0.45 = 75.5 minutes

Therefore agent should calls only up to 75 minutes in Plan A to be least cost alternative. Therefore agent should stay below 75 minutes so that Plan A is the least cost alternative.

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