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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
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 (Click the icon to view additional information.) The company has gathered its cost data for the past year by quarter for paper, toner cartridges, printer maintenance costs, and postage costs for its billing department. The cost data are as follows: (Click the icon to view the data.) Read the requirements Requirement 1. Calculate the variable cost per bill mailed under the current paper-based billing system. The variable cost per bill mailed under the current paper-based billing system is .97 Requirement 2. Assume that the company projects that it will have a total of 760,000 bills to mail in the upcoming quarter. If enough customers choose the paperless billing option so that 20% 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)? By using the paperless billing system, the company would save Requirement 3. What if only 15% of the mailings are converted to the paperless option (assume a total of 760,000 bills)? Should the company still offer the paperless billing system? Explain your rationale. If only 15% of the mailings are converted to the paperless option, should the company still offer the paperless billing option? No Would this option result in a gain or loss? How much would the gain or loss be? - X Data Table Quarter 1 Quarter 2 Quarter 3 Quarter 4 $ Total paper, toner, printer maintenance, and postage costs Total number of bills mailed 614,500 $ 560,000 625,000 $ 590,000 760,000 $ 710,000 630,000 600,000 n Print Done 011 m
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