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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.

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Presentation on theme: "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."— Presentation transcript:

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 PTs profits? – ($ )*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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