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Prestige Telephone

Prestige Telephone. What should we learn? Fixed vs. variable classification Rent vs. Power Average cost is not variable cost Telling if a cost is fully or semi-variable Avoidable vs. unavoidable costs Operating Labor vs. Equipment Leases Traceable vs. Allocated Costs

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Prestige Telephone

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  1. Prestige Telephone What should we learn? Fixed vs. variable classification Rent vs. Power Average cost is not variable cost Telling if a cost is fully or semi-variable Avoidable vs. unavoidable costs Operating Labor vs. Equipment Leases Traceable vs. Allocated Costs Sales Promotion vs. Corporate Overhead

  2. Prestige Telephone What does PDS contribute to PT’s profits? ($800-400)*205 per month Corporate OH ~ $15, 000 Rent & Janitorial charges Overall, not bad at all!! PT profit if PDS discontinued? All unavoidable costs would continue Leases, maintenance, depreciation, Corp. Services All contributions would be lost

  3. Prestige Telephone What should Rowe do? Keep PDS Redesign reporting system to show Fixed and Variable Costs Contribution Margin “Savings” to PTS from subsidized rates Unavoidable costs to PT being picked up by PDS Help increase commercial hours Here alternative c was the best according to many students.

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