The call center of Wobegon Electric Company handles 1.2 million calls per year.
ID: 2384769 • Letter: T
Question
The call center of Wobegon Electric Company handles 1.2 million calls per year. The average call requires six minutes of operator time and 40 percent of the calls require a supervisor to be involved for at least half of the call time. Operators are paid $9 per hour and supervisors are paid $15 per hour. After Wobegon Electric engaged in process benchmarking, call times were reduced by one minute and the number of supervisor-involved calls were reduced by 15 percent. The benchmarking study cost Wobegon Electric Company $200,000.
a. What was Wobegon Electric's total labor cost and labor cost per call at the call center prior to benchmarking? If required, round your answer to two decimal places.
Total Labor Cost
$
Labor Cost Per Call
$
b. What was Wobegon Electric's total labor cost and labor cost per call at the call center after benchmarking? Round interim calculations and final answers to two decimal places.
Total Labor Cost
$
Labor Cost Per Call
$
Explanation / Answer
total operator cost: 1,2000,000*(6/60)*9 = 1,080,000 $ total supervisor cost: 1,200,000*(0.4)*(3/60)*15 = 360,000 $ (lower bound) higher bound = 720,000 $ total labor cost = 1,080,000+360,000 = $1,440,000(lower bound) higher bound = 1,080,000+720,000 = $1,800,000 (higher bound) labor cost/call = lower bound: (1,080,000+360,000)/1,200,000 = $1.2 higher bound: (1,080,000+720,000)/1,200,000 = $1.5 after benchmarking, avg. call time = 5 mins no. of supervisor calls = 0.85*0.4*1,200,000 = 408,000 total operator cost = 1,200,000 * (5/60)*9 = 900,000 $ total supervisor cost = 408,000 * (2.5/60)*15 = $255,000 (lower bound) higher bound = $510,000 fixed cost of study = $200,000 total labor cost = 900,000+255,000 = $1,155,000 (lower bound) higher bound: 900,000+510,000 = $1,410,000 labor cost/call = LB = 1,155,000/1,200,000 = $0.96 HB = 1,410,000/1,200,000 = $1.18
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