De Castro, Allan Paul B.
The Bill French case generally discusses the Break even analysis in the problems that were given. Break even analysis is a very important tool to help any firm in deciding on the best operational volume. It requires three (3) types of costs namely the fixed cost (FC), variable cost (VC), and selling price (SP). As Bill French puts it, “the level of operation at which total costs that is, variable plus non-variable are just covered in the break even volume”. The break even volume is simply the least volume that a company should operate or produce in order to remain in business. There are several assumptions that were made in ...view middle of the document...
Bill French’s analysis was evidently challenged during the meeting by the participants and they all agreed to revise the information so as to provide a better proposal for the changes to be considered for the next year.
Break even analysis aids in determining the profitability of the company. Through it, managers could compare the marginal costs expenditure versus its earnings. It could also be a tool in setting realistic targets and quotas during business planning for projection purposes in the future. And most of all, it could also help in determining the marketability of a particular product so as managers could have an idea which products do sell and which of them needs to be developed. In Managerial Accounting, the rule of thumb is that the model that generates the most sales with the least resources should be manufactured more. My grade for the group is 3.0 since they were able to clearly explain the topic in general.
De Castro, Allan Paul B.
Prestige Telephone Company
The main issue of this case is with regards to the keeping the subsidiary company of PTC which is the Prestige Data Services. It all boils down to the point of view of advantages and disadvantages. It triggers the questions whether the report presented provide information necessary to answer the top management’s queries and what kind of analysis could help with the decisions being considered. Although PTC wholly owns the PDS, it is still considered independent from its parent company having its own set of client list. PDS caters to all the service requirements of PTC but at the same time also could also provide services to other separate entities. Unlike PTC with which prices are regulated, PDS has non-regulated prices which makes it more competitive in the market.
After it was found that the income of PTC was low, the top management of PTC led by Mr. Daniel Lowe, thought that it was time to reassess PDS and was considering alternative courses of action which might...