Prestige Telephone Company

The future of the telecommunication industry is an exciting future. No longer can these companies depend on telephone service plans to maintain profit. Each company needs to find other avenues, packages and services that can be sold to existing customers while attracting new customers. The companies

Question 3: Identify all costs associated with this venture. Categorize these costs as fixed or variable.

2.) For each expense that is variable with respect to revenue hours, calculate the cost per revenue hour.

Using the intercompany-billing rate per hour of $400 and the intercompany demand of 205 hours we calculate revenue and expenses.

The greatest area of opportunity that has been identified is the data center and the continual increased costs of maintaining and manning it. Secondary areas of opportunity have been stagnant sales, which have resulted in a reduction of company profits. It is for this reason that Smith’s Information Services is focusing on the potential outsourcing of the data

investigation has revealed that $211,000 of the fixed manufacturing expenses and $122,000 of the fixed selling

8. I would like to remove allocated costs and fixed overheads and see what would be the variable cost. If this is done, you can see that the variable cost hovers around 7 FF. ( Not many of you have done this)

All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.

Salem Telephone Company is a regulated utility company. As a regulated utility, Salem Telephone Company needs the approval of the Public Service Commission in order to change its rates for telephone service. Finding low cost and effective ways to provide public utility service to its customers is important to such a highly regulated industry. The state Public Service Commission had encouraged all public utilities to find new revenue generating sources for profit in order to reduce high costs and lower the need for rate increases (Bruins, 2005). Operating a telephone company require various computer services to plan, control, and account for its operations. Rather than outsource its data processing to a non-related third

Prestige Telephone Company Average intercompany billing capped at $82,000/month Ri = Pi Qi “Inter company” Pi = $400/hr. → Qi = 205 hours/month “Commercial” PC = $800/hr

The prestige Data Services grew from the needs of the Prestige Telephone Company to meet their needs of data handling at the time but the problem now is that the company is still operating at a loss. But is that a problem for the parent company? We do not think so, if the Prestige Data Services does not exist anymore, the Prestige Telephone still have to pay for the cost such as: lease, maintenance, computer services..., but they get no contribution.

3 variable costs indentified, they are power, operations, material. They are proportional to the revenue intake.

‡ Equipment costs: 1. Computer leases - fixed cost due to the fact that normally they were purchased before the business starts so they are independent from the revenue. 2. Maintenance - fixed cost because the inventory has to always to be controlled independent sell hours or revenue. 3. Depreciation fixed cost because the value of the asset is adjusted or reduced over a specified number of years that the equipment is being used or over the asset¶s useful life. ‡ Computer equipment ± fixed cost as indicated Office equipment and fixtures ± fixed cost

The Coral Systems’ pricing model is the combination of the recurring revenue model and the per product licensing fee. This hybrid model allows company to start each quarter from the ending point of previous subscriber base. Coral sell a one-time license per subscriber according to the current number of subscribers at the time of license. For each addition subscribers, carrier is charged an addition license fee. The recurring revenue stream is created as the customer base grows. The hybrid model can build value for the company and solve potential problem of customers who wanted to buy the application and control.

In today’s business world, it is evident that there is a potentially hidden opportunity in an organization’s rich and diverse customer data. The telecom industry in which our organization operates in, owns a great deal of customer data that portray customer buying behavior daily. This customer data provides a source of insight and a new opportunity for generating revenue, which any organization would want to pursue. To understand how data can transform into revenues, we must first understand why an organization should monetize their data.