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.
Contribution margin: The subsidiary started operations in and has yet to experience a profitable month and by the end of its income was low enough to necessitate a report to shareholders. It is hard to look at the activities in the two companies separately because they are dependent upon one another for services and that is why the subsidiary was created initially.
To reduce the need for rate increases. They will not be reporting costs that are not even being used.The effects of alternative sales or production policies can be more readily appreciated and assessed 5 Q1. Yes Prestige Data Services was problem to Tele company because the deliveries of equipment were delayed and the personnel had commanded higher salaries then expected and the most important was customer were harder to find then earlier estimate had lead the company to expect. Before launching e-business the capsules sales where operated by telephone and the machine sales by retailers. Content Case Summary Prestige Data Services is a subsidiary of Prestige Telephone Company, designed to perform data processing for the telephone company and also to sell computer services to other companies and organizations. For example, if Prestige shuts down the subsidiary it needs to outsource data services from an outside vendor. Consider carefully the differences between reported costs and costs relevant for decision that Daniel Rowe is considering. We will assume that materials are offset by other revenue and therefore, can be excluded from analysis. How to cite this essay Choose cite format:. 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. Sponsor Documents.
Question No: 2 Assuming the company demand for service will average hours per month, what level of commercial sales of computer use would be necessary to break even each month?
Answer: Appraisal of the results of operations of Prestige Data Services has been performed by using the Exhibit No: 2 Summary of its operations during the first quarter of The operations and power costs need to be set apart from the rest of the costs.
A summary follows: a.
And third, to understand the importance of the way in which cost information is reported, and the way in which accounting and reporting systems can be used to highlight the factors which are important to management and for appraisal of operations.