Salem Telephone Company

# Salem Telephone Company - 1. The expenses which are...

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1. The expenses which are variable with respect to revenue hours include Equipment costs: Power; Wages and Salaries: Operations hourly personnel. The expenses which are fixed with respect to revenue hours include all of the remaining expenses are fixed. 2. Power cost per revenue hour is \$4.70/hr Operations hourly personnel: \$24.00/hr Variable cost per revenue hour is \$28.70/hr 3. Revenues Intracompany 82,000 Commercial 110,400 Total Revenues 192,400 Variable expenses (power + hourly personnel) 9,844 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

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Net income (30,383) 4. Revenue = Variable Costs + Fixed Costs 205(400) + X(800) = (X+205)(28.7) + 212,939 X = 177.39 ~ 178 commercial hours sold to break-even 5. x= 138*(1-0.3) ~ 97 (205*400+97*1000)-28.7*(205+97) – 212939 = -42606. This is not a feasible option.
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## This note was uploaded on 08/23/2010 for the course BUS 5431 taught by Professor Dr.smith during the Spring '10 term at Florida Memorial.

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Salem Telephone Company - 1. The expenses which are...

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