1. Prestige Data Services apparently has not lived up to its parent company’s expectation. However‚ based on the numbers‚ the Prestige Data Services appears to be rather potential after just two years of performance. Its revenue hours sold to outside firms have being growing‚ and the majority of Prestige Data Services’ costs are fixed costs‚ e.g.‚ rent‚ custodial services‚ computer lease‚ maintenance‚ etc. In order to determine whether or not the subsidiary is indeed “too good to give up
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Prestige Telephone Company – Case Study In April 2003‚ Daniel Rowe‚ president of Prestige Telephone Company‚ was preparing for a meeting with Susan Bradley‚ Manager of Prestige Data Services‚ a company subsidiary. Partial deregulation and an agreement with the state Public Service Commission had permitted Prestige Telephone to establish a computer data service subsidiary to perform data processing for the telephone company and to sell computer service to other companies and organizations. Mr.
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Case Study – Prestige Telephone Co. Company Profile Prestige Data Services is a subsidiary of Prestige Telephone Company‚ a public utility. They are a computer data service company that does data processing for the parent company in order to sell computer services. The company was opened in order to bring in additional revenue in order to offset increases in telephone rate increases. Throughout the three years of being
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WILLIAM J. BRUNS‚ JR. Prestige Telephone Company Do No Because it operated as a public utility‚ the rates charged by Prestige Telephone Company for telephone service could not be changed without the approval of the Public Service Commission. In presenting the proposal for the new subsidiary‚ Mr. Rowe had argued for a separate but wholly owned entity whose prices for service would not be regulated. In this way‚ Prestige could compete with other computer service organizations in a dynamic
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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
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The current situation of Prestige Data Service revealed a few problems‚ which had mis-presented the performance of Prestige Data Service and misled the manager’s decision making. First of all‚ the current accounting report did not reveal the real contribution made by Prestige Data Service to its parent company. According to the restriction of the state Public Service Commission‚ the average monthly charge for service by the subsidiary to the parent not exceed $82‚000; therefore the intercompany
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: 8 Case Study : Prestige Telephone Company Background of Case Study In April 1997‚ president of Prestige Telephone Company (PTC)‚ Daniel Rowe‚ was making arrangements to meet with its computer data service subsidiary Prestige Data Services’ (henceforth PDS) manager Susan Bradley. This subsidiary performs data processing for the telephone company and sells computer services to other companies. In 1994‚ Rowe suggested that productive computer services subsidiary will decrease the telephone rate
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Estimate the effect on income of each of the options Rowe has suggested if Bradley estimates as follows: a. Increasing the price to commercial customers to $1‚000 per hour would reduce demand by 30 %. Ans : - It is common to business manager in a business unit to adjust different variables (fixed cost‚ variable cost and price strategy) to maximize the bottom-line or top-line to either maximize profit or minimize the operation cost. Provided the data as below‚ 3 variable costs indentified‚ they
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Accounting for Decision Making (GSM5301) Case Study Report 6 Prestige Telephone Company GROUP 4 : LECTURER : Dr. Ahmed Razman HAND IN DATE : 26 March 2014 1.0 INTRODUCTION 2.0 Prestige Data Services is a subsidiary of Prestige Telephone Company‚ designed to perform data processing for the telephone company and selling computer services to other organizations. The subsidiary started operations in 1995 and has yet to experience a profitable month. Worse
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Salem Telephone Company-Case Study Peter Flores‚ President of Salem Telephone Company‚ believes that a computer subsidiary company (Salem Data Services) appears to be unprofitable. And because of this‚ he must decide and determine whether it is actually unprofitable and consider whether changes in prices or promotion might improve profitability by using the Break-Even point analysis. But before we come out to any solutions‚ we must discuss Salem Data Services accounting report
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