Question:
Research In Motion offers services to Blackberry customers that allows them subscription access for wireless connectivity via a mobile carrier. As you complete the following requirements, assume that the Blackberry services department uses many of Research In Motion's existing resources such as its software, phone systems, account databases and buildings.
Required
1. Identify several of the variable, mixed, and fixed costs that the Blackberry services department is likely to incur in carrying out its services.
2. Assume that Blackberry services revenues are expected to grow by 25% in the next year. How do you expect the costs identified in part 1 to change, if at all?
3. Based on your answer to part 2, can Research In Motion use the contribution margin ratio to predict how income will change in response to increases in Blackberry services revenues?