Question

Kandriva, a fitness equipment manufacturer, runs a small-scale customer service center with thirty customer service representatives. The company invests around $5000 annually toward repair and maintenance of telephones and telephone lines catering to its customer service center. In this scenario, it is evident that Kandriva incurs _____.

A) communication cost.
B) processing cost.
C) storage cost.
D) retrieval cost.

Answer 1

Answer: Communication cost

Explanation: In simple words, communication cost refers to the cost that an organisation has to bear to effectively interact with their customers so that they can operate their business. This involves managing the resources needed for communication and hiring personnel to manage those resources.

In the given case, Kandriva invests annually some money on communication mediums and hires service representatives to interact with customers. Hence they incur communication cost.