Problem: Determining the best way for Salem Telephone Company to make its subsidiary, Salem Data services profitable. Decision: Our Decision is that Salem Data should consider spending some cash on promotions and reducing the price of the services rendered to its commercial customers. Analysis: Salem Data Services grew out of the needs of Salem telephone for computer services for its operations but decided to offer its services to other commercial businesses in need of the services. Since its inception, Salem Data has been making losses. On the Salem Data services Quarterly report, we deduced that the variable costs on the report are the hourly personnel and power, the remaining expenses are fixed. The cost per revenue hour for the variable costs is $4.70 for power and $24 for hourly personnel which totals up to $28.70 per revenue hour. Let us assume that the intracompany services usage equaled 205 hours and the commercial usage remained 138 hours; Salem Data services would equal $192,400 while the variable costs will equal $9,844 which will then give a contribution m......

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