An Advertiser Signed an Annual Contract to Purchase 3,000 Column

Question

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The Answer is To determine what should be done to the advertiser's account, we need to calculate the cost of the actual column inches used based on the rate scale provided and compare it to what the advertiser has already paid.

The advertiser contracted for 3,000 column inches at $4.25 per column inch, but only used 2,500 column inches. According to the rate scale, the price per column inch for an annual use of 2,000 to 2,999 column inches is $4.65.

First, let's calculate the cost of the 2,500 column inches at the contracted rate:

Contracted rate cost = 2,500 column inches * $4.25 per column inch
Contracted rate cost = $10,625

Now, let's calculate the cost of the 2,500 column inches at the adjusted rate based on actual usage:

Adjusted rate cost = 2,500 column inches * $4.65 per column inch
Adjusted rate cost = $11,625

The advertiser has paid for more column inches than they used, based on the contracted rate. However, since they used fewer column inches than contracted, the rate per column inch increases to $4.65.

The difference between what the advertiser has paid and what they should have paid at the adjusted rate is:

Difference = Adjusted rate cost - Contracted rate cost
Difference = $11,625 - $10,625
Difference = $1,000

Since the adjusted rate cost is higher than what the advertiser has already paid, the advertiser should be charged an additional $1,000 to account for the higher rate per column inch based on the actual usage of 2,500 column inches.

An Advertiser Signed an Annual Contract to Purchase 3,000 Column

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