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Sun Entertainment is a provider of cable, internet, and on - demand video services. Sun currently sends monthly bills to its customers via the postal

Sun Entertainment is a provider of cable, internet, and on-demand video services. Sun currently sends monthly bills to its customers via the postal service. Because of a concern for the environment and recent increases in postal rates, Sun 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 Sun would like to switch to100% 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 Sun adopts a paperless billing system or not.
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Part 1
Requirement 1. Calculate the variable cost per bill mailed under the current paper-based billing system.(Round your answer to the nearest cent.)
What is the variable cost per bill mailed using the high-low method?Cost information
The cost of the paperless billing system would be $135,550 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 760,000 bills per quarter. (More
than 760,000 bills per quarter would require a different computer system and is outside the scope of
the current situation at Sun.) Sun 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 are as follows:
11Calculate the variable cost per bill mailed under the current paper-based billing system.
2.
Assume that the company projects that it will have a total of 660 comma 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)?
3.
What if only 25% of the mailings are converted to the paperless option(assume a total of 660 comma 000bills)? Should the company still offer the paperless billing system? Explain your rationale.
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