The call center of Wobegon Electric Company handles 1.2 million calls per year. The average call requires six minutes of operator time and 40 percent of the calls require a supervisor to be involved for at least half of the call time. Operators are paid $9 per hour and supervisors are paid $15 per hour. After Wobegon Electric engaged in process benchmarking, call times were reduced by one minute and the number of supervisor-involved calls were reduced by 15 percent. The benchmarking study cost Wobegon Electric Company $200,000.
Wobegon Electric Company
a. What was Wobegon Electric’s total labor cost and labor cost per call at the call center prior to benchmarking?
b. What was Wobegon Electric’s total labor cost and labor cost per call at the call center after benchmarking? (Round up to the nearest penny.)
c. If the new results are expected to continue for three years, was engaging in the benchmarking study profitable to Wobegon Electric Company? Show calculations.