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Salem Telephone Company ("STC")

Question 1

Variable Costs
Equipment costs: Power
Wages and Salaries: Operations hourly personnel

Fixed Costs
Space costs: Rent, custodial services

Equipment costs: Computer leases, maintenance, depreciation of computer equipment and office equipment / fixtures

Wages and Salaries: Operations salaried staff, systems development and maintenance, administration, and sales

Sales promotions
Corporate services

The group actively debated fixed versus variable labor expenses based on our own industry experience, but used our interpretation of the reading to come to our final conclusion. 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......

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Approximate Word Count: 353
Approximate Pages: 2 (250 words per double-spaced page)

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