Darby Computer Associates provides computer services to both small businesses and individuals. It has faced changing conditions in the marketplace, one characterized by constant changes in both hardware and software. Add to that the seemingly endless viruses, and Darby Computer faces a major challenge to the business to stay current and focused on where attention needs to be. The following data summarizes key business statistics for the last four years.

Phil Darby, the owner of Darby Computer Associates, is concerned. It seems he and his team are working harder all of the time, but as the numbers suggest, profits are not following effort. He needs your help to answer the following questions. Note that Phil charges business customers a flat monthly rate, while individuals are charged by the hour.

REQUIRED:

a. Calculate the absolute change for each measurement across the four years. Do this focusing on the change from year to year, working from 20x6 backward to 20x3.

b. Looking only at the magnitude of change, what would you suggest to Phil? Specifically, where should he place his attention?

c. Now let us get a bit fancier and calculate percentage change from one year to the next. To do this, take the amount of change you calculated in requirement (a) above and divide it by the actual measurement for the latest year in your calculations. In other words, there are 36 fewer business customers between 20x3 and 20x4. If you divide 36 by 153, the number of business customers in 20x4, you will get the percentage change between the two years, or -23.5% (rounded). Do this calculation for the remaining measurements across the four years.

d. Given these results, what looks like Phil’s biggest problem now? Do you feel the change you calculated in (a) or the percentage change you did in (c) has more relevance to Phil? Why?

e. What would you recommend Phil do? Write a one- or two- paragraph recommendation using the numbers you have calculated.

Transcribed Image Text:

Measure 20x6 20x5 20x4 20x3 Businesses served 125 135 153 189 Individual customers Classes attended 988 885 825 725 35 27 22 18 Average hours to complete a job 10.5 9.0 8.25 7.75 Average monthly profits $25,323 $26,619 $28,555 $32,683