Salem Telephone

Questions

“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?

Costos Fijos

Space Costs:

Rent

Custodial Services

Equipment Costs:

Computer leases

Maintenance

Depreciation:

Computer Equipment

Office Equipment and fixtures

Wages and Salaries

Operations: salaried staff

Systems development and maintenance

Administration

Sales

Sales Promotion

Corporate Services

Costos Variables:

Equipment Cost

Power

Wages and Salaries

Operations: hourly personnel

For each expense that is variable with respect to revenue hours, calculate the cost per revenue.

Power

January February March

$1,546/ 329hrs. = $4.69 ~ $4.70 $1,485 / 316hrs. = $4.69 ~ $4.70 $1,697 / 361hrs. = $4.70

Hourly Personnel

January February March

$7,896 / 329hrs. = $24 $7,584 / 316hrs. = $24 $8,664 / 361hrs. = $24

Costo Variable Total

Power $4.70

Hourly Personnel $24

Total $28.70

Create a contribution margin income statement for Salem Data Services. Assume that intracompany usage is 205 hours. Assume commercial usage is at March Level

Ventas

(Intracompany 205hrs x $400) $192,400

(Commercial 138 x $800)

Costos Variables

($28.7 x (205 + 138)) ($9,844.1)

Margen de ContribuciÐ"Ñ-n = $182,555.90

Costos Fijos

-rent $8,000

-Custodial Services $1,240

-Computer leases $95,000

-Maintenance $5,400

-Computer Equipment $25,500

-Office Equipment and fixtures $680 ($212,939)

-Office Equipment $1,546

-Operations:salaried staff $21,600

-Systems development and maintenance $12,000

-Administration $9,000

-Sales $11,200

-Sales Promotion $8,083

-Corporate services $15,236

Utilidad Neta = ($30,383.1)

Assuming the intracompany demand for service will average 205hours per month, what level of commercial revenue hours of computer use would be necessary to break even each month.

Ventas = Costos Variables + Costos Fijos

205hrs($400) + x($800) = (x + 205)($28.70) + $212,939

$82,000 + $800x = 28.7x + 5,883.5 + 212,939

771.3x = 136,822.5

x = 177.39 u ~ 177 u

Estimate the effect on income of each of the options Flores has suggested if Wu estimates as follows:

Increasing the price to commercial customers to $1,000 per hour would reduce demand by 30%

Horas

Intracompany 223 hrs.

Commercial 138 вЂ" 30% ~ 97 hrs. Total de horas = 320 hrs.

Con aumento

Ventas

(Intracompany 223hrs x $400) $186,200.00

(Commercial 97hrs x $1,000)

Costos Variables

($28.7 x (223 + 97)) ($9,184.00)

Margen de ContribuciÐ"Ñ-n = $177,016.00

Costos Fijos ($212,939)

Utilidad neta = ($35,923.00)

Sin aumento

Ventas