MAKING THE CONNECTION
UES eI MIs (al Obst aicy
Part 1
Chapters 1-4
CableTech Bell Corporation (CTB operates in the telecommunications industry. CTB has two divisions
the Phore Divsion and the Cable Service Division. The Prone Division manufactures telephones in
several plan's located in the Nicest, The product lines run from relanvely inexoensive touch-ione wal
and cesk phones lislar ho)
Oh. Th produ
15 adklitional channels ana two mone channels:
tional channels and three movie channel
1g activity for the month of
4 table TV senice in
expensive, high-quality
2 the basie package plu
package, which is the besie package plus 2
he Cable Service Dwision reported the fellaw
13:9 bosic package with 28 chennels: an enhonced
Basie Enhanced Pramium
Sales {units} 50,000 500,000 300,000
Price per unit 516 $30 $40
Unit costs:
tly traced 53 Ss 7
or traced 12 s4 $6
#10 313 515
‘The unit costs are divided as follows: 70 pervent production and 30 percent marketing and cuscomer
service. Direct labor cos: is the only diver used for tracing, Ty ivision
3 0 it costs. The preceding, unit produc
the mae
1 uses only production
information wae eravided at the request of
ting manager and was the resultof a spacial stusly
Biyce Young 5, is reasonably satished with the perfermance of the Cable
Service Division. March's performance is fairy typical of what has ng over the past wo
years. The Phone Division, however, ig another matter. Its 0 arformance has been deciin-
ing. Two years ago, income before income taxes had been about 25 percent of sales. Merch’s dismal
performance was also typical for what has bees happening this year end is expected to contnue—
Unless some action by management is taken to reverse the trend. Lueng March, she Phone Dyson
reported the following resuits: