Question

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 Cont per Driver U More Hoursos Communicate Number of Major Refinishes Touchups Communication Builder Alpine Assuming that each of the three customers produces gros profits of $100.000 calculate the profitability from each builder after taking into account the support activity required for each builder Check

Answer 1

ANSWER

Activity	Alpine	Blue Ridge	Pineola
Refinishes	$4800	$2100	$2520
Touchups	15000	11000	11500
Communication	10400	4200	3600
Total support costs	$30,200	$17,300	$17,620
Gross profit	100,000	100,000	100,000
Customer profits	$69,800	$82,700	$82,380
Formulas used:
Activity	Alpine	Blue Ridge	Pineola
Refinishes	=60*80	=60*35	=60*42
Touchups	=100*150	=100*110	=100*115
Communication	=40*260	=40*105	=40*90

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