Salem Telephone Company ("STC") Question 1 Variable Costs Equipment costs: Power Wages and Salaries: Operations hourly personnel Fixed Costs Space costs: Rent‚ custodial services Equipment costs: Computer leases‚ maintenance‚ depreciation of computer equipment and office equipment / fixtures Wages and Salaries: Operations salaried staff‚ systems development and maintenance‚ administration‚ and sales Sales promotions Corporate services The group actively debated fixed
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Salem Telephone Company – Salem Data Services Dear Mr. Flores‚ The objective of our engagement was to analyze Salem Data Services’ (SDS) operations to determine if this is a viable business with potential for growth and future profit or whether the business is likely to remain unprofitable and should be divested. A review of Salem Data Services’ utilization metrics for the first quarter of 2004 has helped us pinpoint the crux of SDS’s unprofitability over this three month span. Underutilization
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Salem Telephone Case 1) Which expenses are variable and which are fixed with respect to revenue hours? Variable Fixed Power Rent Hourly personnel Custodial Services Sales promotion Computer leases Corporate services Maintenance Depreciation expenses - computer and office Salaried employees Systems development Sales 2) For each expense that is variable‚ calculate the cost per revenue hour. Power Personnel Sales Promotion Corporate Services January
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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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Group 2 (Bleaser; Humbles; Pennington; Robin; McLamb) Case Study Salem Telephone Company The purpose of creating the subsidiary is twofold: (1) to keep telephone customers from having rate increases and (2) for Salem Telephone to plan‚ control and make decisions on performance of its operations in the area served. Planning would involve a financial budget and the level of profit needed. Control would be the measurement and comparison of actual to estimated budget analysis of management’s
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Clyde would not have more discretion in the recording of his bartering exchange. First of all‚ he could not make up his fair value. There are certain rules that you must follow with FASB. The fair value is consisting of measurements and how accurate it is. According to paragraph 505-50-30-02‚ “Paragraph 505-50-30-6 establishes that share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued
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Prestige Telephone Company I. Case Background Prestige Data Services (PDS)‚ a subsidiary of Prestige Telephone Company (PTC)‚ has been experiencing bottom line losses for the two years it has been operating since 1995. The subsidiary has been performing all the data processing for the telephone company and selling computer services to other companies and organizations. Susan Bradley‚ the subsidiary manager was preparing for a meeting with Daniel Rowe‚ president of Prestige Telephone
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The following questions are intended to guide you in the identification of important case issues (these are similar to the assignment questions at the end of the case). 1) Identify which of Prestige Data Services’ costs are variable‚ fixed‚ or mixed (recall that for a mixed cost‚ total costs = fixed costs + (variable cost per unit of cost driver x units of cost driver)). For variable costs‚ estimate variable costs per unit of cost driver (note that the cost driver may not be the same for every
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Through our study of Salem Telephone Company (STC)‚ we’re going to analyze whether or not Salem Data Services (SDS) will be a profitable business to keep. We will do so by utilizing break even analysis. Before we can find our solution‚ we should discuss Salem Data Services’ (SDS) accounting report step by step. To begin‚ the various costs incurred to SDS should be grouped into either variable‚ or fixed. The only variable costs that have any relation to the total revenue hours listed from exhibit
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Riverbend Telephone Company The Riverbend Telephone Company is experiencing growth and had previously tried outsourcing some of its installation work to handle the overflow above its capacity. This was unsatisfactory‚ and so to accommodate the new customers‚ RTC needs to obtain a new maintenance truck and crew. It is considering whether leasing or buying the new truck necessary to their operations is the preferable method of investment. Question 1& 2 Without considering financing the
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