Salem Telephone

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November 16, 2011








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We considered costs to be variable if the expenses on the income statement were directly influenced by revenue hours on Exhibit 1 in the case. Question 2 - Power cost per revenue hour is $4.70/hr - Operations hourly personnel: $24.00/hr Variable cost per revenue hour is $28.70/hr Question 3 - Price per unit is $400/hr internal and $800/hr external - Intracompany contribution margin: $371...
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The next allowable hour will be a commercial hour; therefore we consider the contribution margin to be the commercial contribution margin of $771.30/hr. Question 4 Break-even occurs when revenue equals costs so we used the following equation: Revenue = Variable Costs + Fixed Costs 205(400) + X(800) = (X+205)(28...
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