7:39, Monday, June 2, 2025

Salem Telephone Company

1.    ?Revenue hours" represent the key activity that drives costs at Salem Data Services. Which expenses in Exhibit 2 are variable with respect to revenue hours? Which expenses are fixed with respect to revenue hours?

Expenses    
Spase costs:    
Rent    Fixed cost1
Custodial services    Fixed cost2
Equipment costs    
Computer leases    Fixed cost3
Maintenance    Fixed cost4
Depreciation:    
Computer equipment    Fixed cost5
Office equipment and fixtures    Fixed cost5
Power    Variable cost6
Wages and salaries    
Operations: salaried staff    Fixed cost7
Operations: hourly personnel    Variable cost8
Systems development and maintenance    Fixed cost9
Administration    Fixed cost10
Sales    Fixed cost10
Sales promotion    Fixed cost11
Corporate services    Fixed cost11

1 The rent is a fixed cost because SDS has to pay the rent at Salem Telephone independent how many hours they are selling. That means even if SDS sell nothing the rent has to be paid.

2 The custodial services are fixed cost because they depend on Salem Telephone's estimated annual cost per square foot and so they are independent from the revenue of SDS.

3 The computer equipment is a fixed cost due to the fact that normally they were purchased before starts the business and so they are independent from the revenue.

4 The maintenance is a fixed cost because ad example the inventory has always to be controlled independe ...
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