Case Summary
Prestige Data Services is a subsidiary of Prestige Telephone Company, designed to perform data
processing for the telephone company and also to sell computer services to other companies and
organizations. The subsidiary started operations in 1995 and has yet to experience a profitable month
and by the end of 1996 its income was low enough to necessitate a report to shareholders. Mrs. Bradley
thinks the company just needs more time while Mr. Rowe feels it is time to reassess Prestige Data
Services. Mr. Rowe believes it is possible the accounting reports do not reveal the contribution the
Data Service has provided and also the accounting for separate activities may obscure the costs and
benefit provided. Therefore we have used the exhibits provided to analyze and come to a conclusion
whether Prestige Data services should be shutdown or allowed more time to show its contribution.
Alignment of Case with the Theory
The purpose of this case is to conduct CVP (Cost Volume profit Analysis) in a mixed non-profit/pro#t
service context. In the case, it has been asked that as the controller of Prestige Telephone Company,
analyze the 1997 #rst-quarter operating results for Prestige Data Services (a fully-owned subsidiary) and
possible alternative courses of action to improve performance of Prestige Data in the future.
Main Issues in the Case Study
