460 ACCOUNTING FOR MANAGERS
but in the absence of unionization, their interest in retaining their jobs and on-the-
job learning about crop changeover could have a motivational effect, which will
also benefit the business. The cost savings of £467,500 exceed the across-the-board
redundancy savings by £222,500. Some of this could be paid to the agricultural
specialists as a bonus to cover their changed working conditions for the next
12 months.
Case study 4: Call Centre Services PLC
The staffing level in the call centre provides a capacity of 60,000 calls (10 staff @
6,000), but 70,000 calls have been taken. The telemarketing division has subsidized
the operations of the call centre.
In the short term, all costs in CCS are fixed costs. The standard cost of a call
is £250, 000 / 60 ,000 calls=£4.17. The standard cost for 70,000 calls is £291,900.
It could therefore be argued that a more accurate presentation of the divisional
performance is as in Table A4.3.
Note: Telemarketing expenses have been calculated as total expenses (£440,000)
less standard cost for 70,000 calls in the call centre (£291,900).
Table A4.3 Call Centre Services
Call centre Telemarketing Total
Number of calls 70,000 25,000
Revenue 350,000 250,000 600,000
@ standard cost (£4.17) 291,900 148,100 440,000
Operating profit 58,100 101,900 160,000Table A4.4 Call Centre Services
Call centre Telemarketing Total
Number of calls 70,000 25,000
Fee per call £5 £10
Revenue 350,000 250,000 600,000
Less expenses
Staff costs
10 @ £15,000 p.a. 150,000
2 @ £22,000 p.a. 44,000
3 @ £22,000 p.a. 66,000 260,000
Lease costs on telecoms and
IT equipment (shared 50/50)20,000 20,000 40,000Rent (shared in proportion to
staffing: 4/5, 2/596,000 24,000 120,000Telephone call charges 20,000 20,000
Total expenses 310,000 130,000 440,000
Operating profit 40,000 120,000 160,000