Salem Telephone Case Write Up
Autor: jantonacci • December 12, 2016 • Case Study • 912 Words (4 Pages) • 862 Views
Salem Telephone Company
ACCT 5110
October 20, 2016
Dr. Filling
Joseph Antonacci
Salem Telephone Company Questions and Analysis
1. Variable and Fixed expenses with respect to revenue hours are as follows. The expense schedule will show as revenue varies, so will power expense and personnel salaries as well (while the fixed costs remain the same.
Variable Expenses with Respect to Revenue Hours | Fixed Expenses with Respect to Revenue Hours |
1. Power expense hourly 2. Personnel salaries (hourly) expense | 1. Rent 2. Custodial Services 3. Computer Leases 4. Maintenance 5. Depreciation (Computer & Office Equipment & Fixtures 6. Operations Salaried Staff 7. Systems Development and Maintenance 8. Administration 9. Sales 10. Sales Promotion 11. Corporate Services |
2. Breaking down the variable costs on a per-hour (cost) basis.
January | February | March | |
Power Expense/Revenue Hours | [pic 1] | [pic 2] | [pic 3] |
Personnel (Hourly) Ex pense/Revenue Hours | [pic 4] | [pic 5] | [pic 6] |
Total Variable Cost per Revenue Hour | $28.70 | $28.70 | $28.70 |
3. Contribution Margin Income Statement (Intra-Company Usage Based on 205 Hours)
Income Statement
Intracompany: 82,000
Commercial: 110,400
Total Revenue: 192,400
Variable Expenses: 9,844.10 (1612.10+8,232)
Contribution margin: 182,556
Fixed expenses:
Rent: 8,000
Custodial services: 1,240
Computer leases: 95,000
Maintenance: 5,400
Depreciation: 26,180
Salaried staff: 21,600
System development: 12,000
Administration: 9,000
Sales: 11,200
Sales promotion: 8,083
Corporate services: 15,236
Total fixed expenses: 212,939
Net income: -$30,383
4. Assuming the intracompany demand for service is will average 205 hours per month, the level of commercial revenue hours of computer use that would be necessary to break even each month are as follows;
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