2. A call center in India used by U.S. and U.K. credit card holders has a...

2. A call center in India used by U.S. and U.K. credit card holders has a capacity of 1,400,000 calls annually. The fixed cost of the center is $775,000 with an average variable cost of $2 and revenue of $3.50 per call.

(a) Find the # calls that must be placed each year as a % of total capacity to break even.

(b) The center manager expects to dedicate the equivalent of 500,000 of the 1,400,000 capacity to a new product line. This is expected to increase the center's fixed cost to $900,000, of which 50% will be allocated to the new product line. Determine the average revenue per call necessary to make 500,000 calls the breakeven point for only the new product.

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Expert Solution

Rahul Sunny answered 2 weeks ago

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