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Assuming that each of the three customers produces gross profits of $150,000, calculate the profitability from each builder after taking into account the support activity required for each builder. Brookside $ Edgewater $ Hillrose $

Assuming that each of the three customers produces gross profits of $150,000, calculate the profitability from each builder after taking into account the support activity required for each builder. Brookside $ Edgewater $ Hillrose $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Customer Profitability Analysis Elite Services, Inc. provides residential painting services for three home building companies, Brookside, Edgewater, and Hillrose, and it uses a job costing system for determining the costs for completing each job. The job cost system does not capture any cost incurred by Elite for return touchups and refinishes after the homeowner occupies the home. Elite paints each house on a square footage contract price, which includes painting as well as all refinishes and touchups required after the homes are occupied. Each year, the company generates about one-third of its total revenues and gross profits from each of the three builders. The Elite owner has observed that the builders, however, require substantially different levels of support following the completion of jobs. The following data have been gathered: Support Activity Driver Major refinishes Hours on jobs Number of visits Touchups Communication Number of calls Major Builder Refinishes Touchups Brookside Edgewater Hillrose Costs per Driver Unit $ 150 $ 100 $30 120 70 80 Edgewater $ Hillrose $ 260 205 220 Communication 900 530 590 Assuming that each of the three customers produces gross profits of $150,000, calculate the profitability from each builder after taking into account the support activity required for each builder. Brookside $
Transcribed Image Text:Customer Profitability Analysis Elite Services, Inc. provides residential painting services for three home building companies, Brookside, Edgewater, and Hillrose, and it uses a job costing system for determining the costs for completing each job. The job cost system does not capture any cost incurred by Elite for return touchups and refinishes after the homeowner occupies the home. Elite paints each house on a square footage contract price, which includes painting as well as all refinishes and touchups required after the homes are occupied. Each year, the company generates about one-third of its total revenues and gross profits from each of the three builders. The Elite owner has observed that the builders, however, require substantially different levels of support following the completion of jobs. The following data have been gathered: Support Activity Driver Major refinishes Hours on jobs Number of visits Touchups Communication Number of calls Major Builder Refinishes Touchups Brookside Edgewater Hillrose Costs per Driver Unit $ 150 $ 100 $30 120 70 80 Edgewater $ Hillrose $ 260 205 220 Communication 900 530 590 Assuming that each of the three customers produces gross profits of $150,000, calculate the profitability from each builder after taking into account the support activity required for each builder. Brookside $
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