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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1. Revenue hours" represent the key activity that drives costs at Salem Data Services. Which expenses in Exhibit 2 are variable with respect to revenue hours? Which expenses are fixed with respect to revenue hours? Expenses Spase costs: Rent Fixed cost1 Custodial services Fixed cost2 Equipment costs Computer leases Fixed cost3 Maintenance Fixed cost4 Depreciation: Computer equipment Fixed cost5 Office equipment and fixtures Fixed cost5 Power Variable cost6 Wages and salaries
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1. Revenue hours represent the key activity that drives costs at Salem Data Services. Which expenses in Exhibit 2 are variable with respect to revenue hours? Which expenses are fixed with respect to revenue hours? A) Variable with respect to revenue hours Hourly personnel Salaries expense Power Expense B) Fixed expenses with respect to revenue hours: Rent Custodial services Computer leases Maintenance Depreciation of computer equipment‚ office equipment and fixtures
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office equipment and fixtures are the only variable cost with respect to revenue hours. All other costs are fixed with respect to revenue hours. With higher fixed cost‚ Salem Data Services has a higher leverage and is therefore riskier. 2. ($7‚896 + $1‚546) / 329 hours = $28.70 / hour. For every hour spent working‚ the company spends 28.70 dollars. 3. Intracompany Commercial Total Number of Hours (a): 205 138 343 Revenue (a x b): $82‚000 $110‚400 $192‚400 Variable Costs (a x
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Re: Salem Telephone Company‚ Salem Data Services Accounting Analysis Salem Telephone Company recently established Salem Date Services‚ a computer service subsidiary of the telephone company. The new subsidiary was established in efforts to earn the company increased revenues in order to relieve pressure to increase rates for the regulated telephone company. Salem Data Services accounting has shown profit loss for the subsidiary over the past three months. Peter Flores‚ president of Salem Telephone
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Case Study #1. Salem Telephone Company 1. Variable expenses: Power (the more hours sold‚ the more energy consumed) The hourly personnel (operations) works only when the computers are in operation Fixed expenses: The rent has to be paid despite any level of production ($8‚000 monthly) The custodial services depend on Salem Telephone’s estimated space‚ they are independent from the revenue of the Company The computer leases were acquired to run the business (before it was actually started
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James Whittle Salem Telephone Company Case Study 9/29/2014 1.) The variable costs in Exhibit 2 are Power and Hourly Personnel Wages as the costs fluctuate from month to month and are driven by the revenue hours for the company. The fixed costs in Exhibit 2 are Rent‚ Custodial Services‚ Computer Equipment Leases‚ Computer Maintenance‚ Computer Depreciation‚ Office Equipment and Fixtures Depreciation‚ Salaried Staff Wages‚ Systems Development and Maintenance‚ Administrative Wages‚ Sales Wages
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sales‚ sales promotions‚ corporate services. 2. Units: dollars per hour January February March Power expense 4.7 4.7 4.7 personnel salaries expense 24 24 24 Total Variable cost per revenue hour 28.7 28.7 28.7 3. Income statement for Salem Data Services From the article‚ I know that intracompany work was billed at $400 per hour‚ and commercial sales were billed at $800 per hour. So‚ intracompany contribution margin: $400-$28.7= $371.3/hr Commercial contribution margin: $800-$28.7=$771
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1.) VARIABLE EXPENSES - Power - Operations (hourly personnel) FIXED EXPENSES - Rent - Custodial services - Computer leases - Maintenance - Depreciation - Operations (salaried staff) - Systems development and maintenance - Administration - Sales - Sales promotion - Corporate services 2.) VARIABLE EXPENSES: COST/HOUR JAN. FEB. MAR. Power: 4.7 4.7 4.7 Operations (hourly personnel): 24 24 24 TOTAL: 28.7 28.7 28.7 3.) CONTRIBUTION MARGIN INCOME STATEMENT
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Winning Hearts and Minds in War of Plagiarism Summary In Scott Jaschiks’ book titled “Winning Hearts and Minds in War on Plagiarism‚” Jaschik describes the issue of first-year English students plagiarizing work and the numerous faculty members’ solutions to solve plagiarizing. Teachers‚ like North Carolina State University professor Kate Hagopian‚ are working with first-year English students to teach students academic integrity and to understand why students plagiarize. Teachers have
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