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.

Expert Solution

Rahul Sunny answered 6 months ago

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