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 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 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:

$11$Calculate 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 $000$bills$)?$ Should the company still offer the paperless billing$$ system? Explain your rationale.