Question
Southland Corporation is a small information systems consulting firm that specializes in helping companies implement standard sales-management software. The market for Southlands services is very
Southland Corporation is a small information systems consulting firm that specializes in helping companies implement standard sales-management software. The market for Southlands services is very competitive. To compete successfully, Southland must deliver quality service at a low cost. Southland presents the following data for 2012 and 2013.
| 2013 | 2014 |
1.Number of billed jobs | 40 | 55 |
2.Selling Price per job | $45000 | $42000 |
3.Software implementation labor hours | 25,000 | 28,000 |
4.Cost /Software implementation labor hour | 58 | 60 |
5.Software Implementation support capacity (number of jobs it can do) | 70 | 70 |
6.Total cost of software-implementation support | $224,000 | $252,000 |
7. Software-implementation support-capacity cost per job (row 6 , row 5) | $3,200 | $3600 |
Software-implementation labor-hour costs are variable costs. Software-implementation support costs for each year depend on the software-implementation support capacity Southland chooses to maintain each year (that is, the number of jobs it can do each year). Software-implementation support costs do not vary with the actual number of jobs done that year.
1.Revenue Effect of Growth Component on the firm change in net income
2. Cost Effect of Growth Component (labor and Support Costs)
3. Revenue Effect of the Price Recovery Effect Component:
4. Labor Cost Effect of Price Recovery Component
5. Net Productivity Effect on net Income
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started