BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form.
Form Type Mix of Forms Form Cost
A 0.2 $0.40
B 0.2 $0.20
C 0.2 $0.20
D 0.2 $0.80
E 0.2 $0.40
a. The expected cost of digitizing a form is $_______ .
b. Suppose that after the agreement, the client sends an equal mix of forms of types D and E only. The expected digitization cost per form of the forms sent by the client is $________ . This leads to an expected loss of $_______ per form for BPO.