Bridgett Jamison
Managerial Accounting
Salem Telephone Company Case Study

1)
Variable Expenses with respect to revenue hours are the power expense and the hourly personnel salaries expense. Fixed expenses with respect to revenue hours are rent, custodial services, computer leases, maintenance, depreciation of computer equipment and office equipment and fixtures, operations salaried staff, systems development and maintenance, administration, and sales, sales promotions, corporate services.

2) | | | | | | | January | February | March | | | | | | Power | 1,546 | 1,485 | 1,697 | Operations hourly personnel | 7,896 | 7,584 | 8,664 | Total variable costs | 9,442 | 9,069 | 10,361 | | | | | | Total revenue hours | 329 | 316 | 361 | | | | | | Variable costs/revenue hour | 28.70 | 28.70 | 28.70 | | | | | |

3)

| | | | | | Revenues | | | $ | IntraCompany | | | 89,200 | Commercial | | | 110,400 | Total Revenues | | | 199,600 | | | | | | | Variable expenses (power+hourly personnel) | | 10,361 | Contribution margin | | | 189,239 | | | | | | | 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 | | | | | | | Net income | | | (23,700) | | | | |

4)

| | | | | | | revenue = variable costs + fixed costs | 205(400) + crh(800) = (crh + 205)(28.7) + 212,939 | 82,000 + 800crh = 28.7crh +5883.5 + 212,939 | 771.3crh = 136822.5 |