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Case Discussion Questions for April 5

Case Discussion Questions for April 5 - 5 Estimate the...

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Case Discussion Questions for April 5 Note: We will defer discussion of San Francisco Bay Consulting until a later date. Birch Paper Co. 1. Which bid should Mr. Kenton accept? 2. Which bid is in the best interest of Birch Paper Co? 3. Should the commercial vice-president intervene? If so, how? Salem Phone co. Anwer the six questions provided in the case. 1. Revenue hours represent the key activity that drives costs at Salem Data Services. Which expenses are variable with respect to revenue hours? Which are fixed? 2. Calculate the cost per hour for the variable expenses. 3. Create a contribution margin income statement for Salem Data Services. Assume intra- company usage is 205 hours per month, assume that commercial usage is at the March level. 4. Assuming intra-company usage is 205 hours, what level of commercial revenue hours of computer use would be necessary to break even each month?
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Unformatted text preview: 5. Estimate the effect on income of each of the options Flores has suggested if Wu estimates as follows: a. Increasing the price to commercial customers to $1,000 per hour would reduce demand by 30%. b. Reducing the price to commercial customers to $600 per hour would increase demand by 30%. c. Increased promotion would increase revenue hours by up to 30%. Wu is unsure how much promotion this would take. 6. Based on your analysis above, is Salem Data Services really a problem to Salem Telephone Company? What should Flores do about Salem Data Services? Kansas City Zephyrs Baseball Club, Inc. 1. How much did the Kansas City Zephyrs Baseball Club earn in 1983 and 1984? 2. How should Bill Ahern resolve the accounting conflict between the owners and players?...
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