Ground Entertainment is a provider of cable, internet, and on-demand video services. Ground currently sends monthly bills to its customers via the postal service. Because of a concern for the environment and recent increases in postal rates, Ground management is considering offering an option to its customers for paperless billing. In addition to saving printing, paper, and postal costs, paperless billing will save energy and water (through reduced paper needs, reduced waste disposal, and reduced transportation needs.) While Ground would like to switch to 100% paperless billing, many of its customers are not comfortable with paperless billing or may not have Web access, so the paper billing option will remain, regardless of whether Ground adopts a paperless billing system or not. The cost of the paperless billing system would be $118,000 per quarter with no variable costs since the costs of the system are the salaries of the clerks and the cost of leasing the computer system. The paperless billing system being proposed would be able to handle up to 740,000 bills per quarter (More than 740,000 bills per quarter would require a different computer system and is outside the scope of the current situation at Ground.) Ground has gathered its cost data for the past year by quarter for paper, toner cartridges, printer maintenance costs, and postage costs for the billing department. The cost data is as follows: (Click the icon to view the data.) Requirements Requirement 1. Calculate the variable cost per bill mailed under the current paper-based billing system Using the high-low method, the variable cost per bill mailed under the current paper-based billing system is $0.60 (Round your answer to the nearest cent.) Requirement 2. Assume that the company projects that it will have a total of 600,000 bills to mail in the upcoming quarter. If enough customers choose the paperless billing option so that 35% of the mailings can be converted to paperless, how much would the company save from the paperless billing system (be sure to consider the cost of the paperless billing system)? The company would save $126000 from using the paperless billing system. Requirement 3. What if only 30% of the mailings are converted to the paperless option (assume a total of 600,000 bills)? Should the company still offer the paperless billing system? Explain your rationale (Enter any losses as a positive number.) Enter your answer in each of the answer boxes AS Windo Ground Entertainment is a provider of cable, internet, and on-demand video The cost of the paperless billing system would be $118,000 per quarter with services. Ground currently sends monthly bills to its customers via the postal variable costs since the costs of the system are the salaries of the clerks an service. Because of a concern for the environment and recent increases in postal cost of leasing the computer system. The paperless billing system being pro rates, Ground management is considering offering an option to its customers for would be able to handle up to 740,000 bills per quarter (More than 740,000 paperless billing. In addition to saving printing, paper, and postal costs, paperless per quarter would require a different computer system and is outside the so billing will save energy and water through reduced paper needs, reduced waste the current situation at Ground) disposal, and reduced transportation needs.) While Ground would like to switch to 100% paperless billing, many of its customers are not comfortable with paperless Ground has gathered its cost data for the past year by quarter for paper, to billing or may not have Web access, so the paper billing option will remain, cartridges, printer maintenance costs, and postage costs for the billing regardless of whether Ground adopts a paperless billing system or not department. The cost data is as follows: (Click the icon to view the data.) Requirements wywar wwwwwwwwwwwwww Requirement 2. Assume that the company projects that it will have a total of 600,000 bills to mail in the upcoming quarter. If enough customers choose the paperless billing option so that 35% of the mailings can be converted to paperless, how much would the company save from the paperless billing system (be su consider the cost of the paperless billing system)? The company would save $ 126000 from using the paperless billing system Requirement 3. What if only 30% of the mailings are converted to the paperless option (assume a total of 600,000 bills)? Should the company still offer the paperless billing system? Explain your rationale (Enter any losses as a positive number.) If only 30% of the mailings are converted to the paperless option, the company should no longer offer the paperless billing system because the company loses $10000 from using the paperless billing system, Enter your answer in each of the answer boxes. provider of cable, internet, and on-demand video Eends monthly bills to its customers via the postal ern for the environment and recent increases in postal is considering offering an option to its customers for to saving printing, paper, and postal costs, paperless water (through reduced paper needs, reduced waste The cost of the paperless billing system would be $118,000 per variable costs since the costs of the system are the salaries of th cost of leasing the computer system. The paperless billing syster would be able to handle up to 740,000 bills per quarter (More tha per quarter would require a different computer system and is out the current situation at Ground) x puarter fe s for the i Data Table Quarter 1 Quarter 2 Quarter 3 Quarter 4 PTS cho illing sy $ 658,000 $ Total paper, toner, printer maintenance, and postage costs Total number of bills mailed 670,000 $ 550,000 790,000 $ 730,000 680,000 570,000 510,000 ny still Print Done offer the paperless billing system because the are converted to the paperless option, the company should no longer g the paperless billing system
