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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Summary Prestige Data Services is a subsidiary of Prestige Telephone Company‚ designed to perform data processing for the telephone company and also to sell computer services to other companies and organizations. The subsidiary started operations in 1995 and has yet to experience a profitable month and by the end of 1996 its income was low enough to necessitate a report to shareholders. Mrs. Bradley thinks the company just needs more time while Mr. Rowe feels it is time to reassess Prestige
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unit of a product (or service) that‚ when sold at the target price‚ enables the company to achieve the targeted operating income per unit. 12-7 Value engineering is a systematic evaluation of all aspects of the value-chain business functions‚ with the objective of reducing costs while satisfying customer needs. Value engineering via improvement in product and process designs is a principal technique that companies use to achieve target cost per unit. 12-8 A
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Title: PRESTIGE TELEPHONE COMPANY: A CASE ANALYSIS Point of View: Management Consultant I. Issues and Concerns: ■ In 1999‚ the Public Service Commission encouraged all public utilities to: 1. seek new sources of revenues and profits since heading towards deregulation; and 2. To reduce the need for rate increases. ■ Prestige Telephone Co. realized that a centralized service that could plan‚ control‚ and account for its own
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30‚230 165‚030 Deduct: Increase in Accounts Receivable 4‚150 Increase in Inventories 5‚900 Decrease in Salaries Payable 1‚130 11‚180 Net Cash Flows from Operating Activities P153‚850 COST VOLUME PROFIT 1. Melanie Company produces a merchandise that has the following data: Unit Sales price P80 per unit Unit vairiable costs P48 per unit Total fixes costs P640‚000 per annum Units sold during the current year P25‚000 units
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CHOICE QUESTIONS 1. CVP analysis can be used to study the effect of: A. changes in selling prices on a company ’s profitability. B. changes in variable costs on a company ’s profitability. C. changes in fixed costs on a company ’s profitability. D. changes in product sales mix on a company ’s profitability. E. All of these. 2. The break-even point is that level of activity where: A. total revenue equals total cost. B. variable cost equals fixed cost. C. total contribution margin equals the sum of variable
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| Prestige Data Service 2010 SUMMER Executive Summary To assist Prestige Telephone Company on making the decision of continue its subsidiary or not‚ this report provides an analysis of Prestige Data Service (the subsidiary) on the status quo revenues and costs‚ a prediction on its break even situation‚ as well as possible options to increase profit. The report has its limitations due to insufficient detailed information on both other revenues and variable costs of Prestige Data Service
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Case Study: Contribution Margin and Variance Analysis By: Sachin Malhotra Student ID:xxxxxxxxx Presented To: Prof. G. Dunning Course: 04-70-256 Section 2 Date: November 28‚ 2008 Explanation of Profit Decline The decline in profits was due to a combination of various market‚ as well as‚ production factors. Firstly‚ the decreased market share was a major cause of the decline in the profits. This was quite surprising for a company that is operating in a growing market. The total market for
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What is contribution margin? In cost-volume-profit analysis of managerial accounting contribution margin is a very concept. The evaluation of contribution margin for any product is quite easy yet its usage is wide and when applied with various other metrics of CVP analysis such as PV Ratio‚ Break Even Point‚ variable cost‚ fixed cost‚ etc it helps to take major production decisions relating to volume of production and sales‚ and profitability of such levels of sales or production. Step 1:
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ACC604 Final Exam Practice Questions – Series H 1. The Work in Process inventory account of a manufacturing company shows a balance of $18‚000 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $6‚000 and $3‚000 for materials‚ and charges of $4‚000 and $2‚000 for direct labor. From this information‚ it appears that the company is using a predetermined overhead rate‚ as a percentage of direct labor costs‚ of: A. 50% B. 200% C. 300% D. 20%
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