Revenue Hours Intercompany
Jan 206
Feb 181
March 223
Commercial Total Revenue Hours Service Hours Available Hours
123 329 32 223
135 316 32 164
138 361 40 143
Total Hours
584
512
544
Jan
Feb
March
$82,400
$72,400
$89,200
$98,400 $9,241 $190,041
$108,000 $9,184 $189,584
$110,400 $12,685 $212,285
$8,000 $1,240
$8,000 $1,240
$8,000 $1,240
$95,000 $5,400
$95,000 $5,400
$95,000 $5,400
$25,500 $680 $1,633
$25,500 $680 $1,592
$25,500 $680 $1,803
$21,600 $7,896 $12,000 $9,000 $11,200 $9,031 $7,909 $15,424 $231,513 -$41,472
$21,600 $7,584 $12,000 $9,000 $11,200 $8,731 $7,039 $15,359 $229,925 -$40,341
$21,600 $8,664 $12,000 $9,000 $11,200 $10,317 $8,083 $15,236 $233,723 -$21,438
Revenues Intercompany Sales Commercial Sales Computer Use Other Total Revenue Expenses Space Costs Rent Custodial Services Equipment Cost Computer Leases Maintenance Depreciation Computer Equipment Office Equipment & Fixtures Power Wages And Salaries Operations Fixed Variable cost System Development & Maintenance Administration Sales Materials Sales Promotions Corporate Services Total Expenses Net Income (Loss)
Operations Salaries & Wages Distribution Jan Feb Salaries Wages $/Hr Billed Hr Total
21600 24 329 29,496
21600 24 316 29,184
March 21600 24 361 30,264
Price /Hr Varible Cost /Hr Contribution Margin/Hr Break Even Analysis S.No Description
Intra Company Commercial Sales Sales 400 800 24 24 376 776
Amount/Hr
A B C D
Monthly Avg Fixed Cost Inter Company Sales (hours) Contribtion Margin /Hr Inter company Contribtion Margin
199,093 205 376 77,080
E
Fixed Cost to be Recoverd from Commercial Sales
122,013
D G
Contribtion Margin /Hr Break Even Commercial Hours
776 157
Avg Monthly Hours Price /Hr Varible Cost /Hr Contribution Margin/Hr
Intra Company Commercial Sales Sales 203 132 400 800 24 24 376 776
Option (a) Increasing Price to Commercial Customers to $1000/hr ,Demand Reduction Original Option Hours Price/Hr Variable Cost /Hr Contribution Margin/Hr Total Contribution Margin
132 $800 $24 $776 $102,432
92.40 $1,000 $24 $976 $90,182
Contribution Margin will reduce by $12,250 Not recommended to utilize the option. Option (b) Decreasinng Price to Commercial Customers to $600/hr ,Demand increase b Original Option Hours 132 Price/Hr $800 Variable Cost /Hr $24 Contribution Margin/Hr $776 Total Contribution Margin $102,432 Contribution Margin will reduce by $3,590 Not recommended to utilize the option.
172 $600 $24 $576 $98,842
Option (c) Incresed promotion will increase demand by 30% Hours Price/Hr Variable Cost /Hr Contribution Margin/Hr Total Contribution Margin
Original 132 $800 $24 $776 $102,432
Option 172 $800 $24 $776 $133,162
Avg Contribution Margin will go up by $30,730 Max $30,730 can be spent on promotion without having any nega
Option (d) Reducing Operation hours to 16 on Weekdays & 8 on saturdays,20% Commec
Hours Price/Hr Variable Cost /Hr Contribution Margin/Hr Total Contribution Margin
Original
Option
132 $800 $24 $776 $102,432
105.60 $800 $24 $776 $81,946
Contribution Margin will reduce by $17,917 No clear reduction in Fixed Cost is visible. Power Cost is Likely to be reduced by Approx 1/3 Amount
y 30% Remarks 30% Reduction in Demand Price up by $200/hr No change -$12,250
y 30% Remarks 30% increase in Demand Price up by $200/hr No change -$3,590
Remarks 30% increase in Demand Price up by $200/hr No change $30,730 tive impact.
ia Sales Reduction Remarks 20% Reduction in Demand No change -$20,486
Jan $82,400
Feb $72,400
$98,400 $9,241 $190,041
$108,000 $9,184 $189,584
Variable Expenses Wages Contribution Margin Fixed Expenses Computer Leases Equipment Cost Maintenance Computer Equipment Depreciation Office Equipment & Fixtures
$7,896 $182,145
$7,584 $182,000
$95,000 $5,400 $25,500 $680
$95,000 $5,400 $25,500 $680
Power
$1,633 $21,600 $12,000 $9,000 $11,200 $9,031 $7,909 $198,953 -$16,808
$1,592 $21,600 $12,000 $9,000 $11,200 $8,731 $7,039 $197,742 -$15,742
Revenues Intracompany Sales (Hours X $400/Hr)
Commercial Sales
Salaries
Computer Use (Hours X $800/Hr) Other Income Total Revenue
Operations System Development & Mtc Administration Sales
Materials Sales Promotions Total Fixed expenses Net Operating Income (Loss)
Remarks/Assumptions 1. Intracompany Expense payment of Rent,Custodial Services & Corporate Services re Assumed as these Inhouse services are not marketable & No cost reduction will be the Telephone Compnay if discontinuied. 2. Materials ,Power ,Sales Promotions in someway moving with Revenue Hours. But no relation was Visible. It represents semi Fixed Costs. Due to lack of details, assumed as
March $89,200 $110,400 $12,685 $212,285 $8,664 $203,621 $95,000 $5,400 $25,500 $680 $1,803 $21,600 $12,000 $9,000 $11,200 $10,317 $8,083 $200,583 $3,038
oved, re for direct fixed Cost.
Decision : Closing Prestige Data Services or Not
Additional Costs and Contribution Margin Reduction (Monthly) S.No Description in $ Additional cost on Account of Market Rate 1 82,000 Billing 2
Contribution Margin forgone
189,255
Total
271,255
Fixed Cost Reduction (Monthly) S.No Description
in $
1
Maintenance
5,400
2
Power Cost
1,676
3
Materials Cost
9,360
4
Sales Promotion Cost
7,677
5
Fixed Salaries
53,800
6
Fixed Assets
26,180
Total Monthly Impact of Closing Subsidary Addition impact of 4 year Lease
104,093 -167,163 -4,560,000
Assumptions/Remarks 1. Telephone Company Will not be able to Realise Rent in Market. 2. Telephone Company Will not be able to Reduce any cost on accou Services to data Company.
Remarks Market Rate is $800/hr,Current Billing Rate is $400/Hr Avg Monthly Contribution Margin
Remarks
System Development & Maintenance,Admin & Sales Staff As they will be sold at Book Value
nt of Not giving Custodial & Coporate
