Prestige Telephone
Case Study
Prestige Telephone Co.
CLASSIFICATION OF COSTS
Jan Fixed costs: Space rent Custodial services Computer leases Maintenance Depreciation Power Wages: Operations Systems development Admnistration Sales Sales promotions Total fixed costs I Corporate services Total fixed costs II Variable cost per hour: Power Wages operations Materials Variable unit cost per hour 8.000 1.240 95.000 5.400 26.180 Feb 8.000 1.240 95.000 5.400 26.180 Mar 8.000 1.240 95.000 5.400 26.180 Average 8.000 1.240 95.000 5.400 26.180 181 24.898 12.000 9.000 11.200 7.677 200.776 15.236 216.012
12.000 9.000 11.200 7.909
12.000 9.000 11.200 7.039
12.000 9.000 11.200 8.083
4,04 20,10 25,28 49,42
VARIABLE INCOME STATEMENT
% Revenue: Intracompany Commercial Other Revenue Variable costs Contribution margin Fixed costs Net income (loss) Rounding error Price 400 800 6,36% 361 Volume 223 138 Total 89.200 110.400 12.685 212.285 17.841 194.444 216.012 (21.568) (130)
@ João C. Neves, ISEG Lisbon, 2004
1
Case Study
Prestige Telephone Co.
BREAK-EVEN ANALYSIS
Including Without corp. Corp.Services Services Cash Breakeven
Fixed cost to be covered by commercial sales: Fixed costs Other fixed revenues Contribution by intracompany sales Fixed costs to be covered by commercial sales Real No. Of commercial hours Contribution margin per hour of commercial sales: Price Variable cost Contribution margin per hour of commercial sales Break-even of commercial sales: No. Hours Revenue Safety margin
216.012 12.685 78.179 125.148 138
200.776 12.685 78.179 109.912 138
189.832 12.685 78.179 98.968 138
800,00 49,42 750,58 167 133.600 21,0%
800,00 49,42 750,58 146 116.800 5,8%
800,00 49,42 750,58 132 105.600 -4,3%
Responses to questions:
Change price to Variance on demand % New demand in No. Hours New unit contribution margin New contribution margin Previous contribution margin Incremental benefit Actual fixed costs Allowed increase in promotion d) Reduce to
Prestige Telephone Co.
CLASSIFICATION OF COSTS
Jan Fixed costs: Space rent Custodial services Computer leases Maintenance Depreciation Power Wages: Operations Systems development Admnistration Sales Sales promotions Total fixed costs I Corporate services Total fixed costs II Variable cost per hour: Power Wages operations Materials Variable unit cost per hour 8.000 1.240 95.000 5.400 26.180 Feb 8.000 1.240 95.000 5.400 26.180 Mar 8.000 1.240 95.000 5.400 26.180 Average 8.000 1.240 95.000 5.400 26.180 181 24.898 12.000 9.000 11.200 7.677 200.776 15.236 216.012
12.000 9.000 11.200 7.909
12.000 9.000 11.200 7.039
12.000 9.000 11.200 8.083
4,04 20,10 25,28 49,42
VARIABLE INCOME STATEMENT
% Revenue: Intracompany Commercial Other Revenue Variable costs Contribution margin Fixed costs Net income (loss) Rounding error Price 400 800 6,36% 361 Volume 223 138 Total 89.200 110.400 12.685 212.285 17.841 194.444 216.012 (21.568) (130)
@ João C. Neves, ISEG Lisbon, 2004
1
Case Study
Prestige Telephone Co.
BREAK-EVEN ANALYSIS
Including Without corp. Corp.Services Services Cash Breakeven
Fixed cost to be covered by commercial sales: Fixed costs Other fixed revenues Contribution by intracompany sales Fixed costs to be covered by commercial sales Real No. Of commercial hours Contribution margin per hour of commercial sales: Price Variable cost Contribution margin per hour of commercial sales Break-even of commercial sales: No. Hours Revenue Safety margin
216.012 12.685 78.179 125.148 138
200.776 12.685 78.179 109.912 138
189.832 12.685 78.179 98.968 138
800,00 49,42 750,58 167 133.600 21,0%
800,00 49,42 750,58 146 116.800 5,8%
800,00 49,42 750,58 132 105.600 -4,3%
Responses to questions:
Change price to Variance on demand % New demand in No. Hours New unit contribution margin New contribution margin Previous contribution margin Incremental benefit Actual fixed costs Allowed increase in promotion d) Reduce to