Customer Profitability Analysis HyStandard Services, Inc. provides residential painting services for three home building companies, Alpine, Blue Ridge, and Pineola, and it uses a job costing system for determining the con for completing each job. The job cost system does not capture any cost incurred by HyStandard for return touchups and refinishes after the homeowner occupies the home. Hytandard 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 HyStandard 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 refreshes Hours on jobs Touchups Communication Number of vis Number of calls Cost per Driver Unit $200 80 35 42 88 Builder Major Refinishes Touchups Communication Alpine Blue Ridge 150 110 100 340 205 190 Assuming that each of the three customers produces gross profits of $170,000, calculate the profitability from each builder after taking into account the support activity required for each builder.
Customer Profitability Analysis HyStandard Services, Inc. provides residential painting services for three home building companies, Alpine, Blue Ridge, and Pineola, and it uses a job costing system for determining the con for completing each job. The job cost system does not capture any cost incurred by HyStandard for return touchups and refinishes after the homeowner occupies the home. Hytandard 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 HyStandard 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 refreshes Hours on jobs Touchups Communication Number of vis Number of calls Cost per Driver Unit $200 80 35 42 88 Builder Major Refinishes Touchups Communication Alpine Blue Ridge 150 110 100 340 205 190 Assuming that each of the three customers produces gross profits of $170,000, calculate the profitability from each builder after taking into account the support activity required for each builder.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Customer Profitability Analysis
HyStandard Services, Inc. provides residential painting services for three home building companies, Alpine, Blue Ridge, and Pineola, 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 HyStandard for return touchups and refinishes after the homeowner occupies the home. HyStandard
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 HyStandard 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
Touchups
Communication
Number of viuts
Number of calls
Blue Ridge
Pineola
Builder Major Refinishes Touchups Communication
Alpine
Cost per Driver Unit
$200
100
80
35
150
110
115
360
201
190
Assuming that each of the three customers produces gross profits of $170,000, calculate the profitability from each builder after taking into account the support activity required for each
builder.
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