Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tri-city area. IS's costs consist of the cost of technicians and equipment that are directly traceable to the customer site and a pool of office overhead. Until recently, IS estimated customer profitability by allocating the office overhead to each customer based on share of revenues. For 2015, IS reported the following results:

Tina Sherman, IS's new controller, notes that office overhead is more than 10% of total costs, so she spends a couple of weeks analyzing the consumption of office overhead resources by customers. She collects the following information:
Activity Area Cost Driver Rate
Service-call handling ........................... $75 per service call
Parts ordering ........................... 80 per web-based parts order
Billing and collection .................... 50 per bill (or reminder)
Customer database maintenance ............... 10 per service call

Required
1. Compute customer-level operating income using the new information that Sherman has gathered.
2. Prepare exhibits for IS similar to Exhibits 16-10 and 16-11 . Comment on the results.
3. What options should IS consider, with regard to individual customers, in light of the new data and analysis of office overhead?

Avery Okie Wizard Grainger DuranTotal S260,000 $200,000 S322,000 S122,000 S212,000 $1,116,000 Revenues Technician and equipment cost 182,000 75000 225,000 07,000 178,000 867,000 Office overhead allocated 31,859 24,50739,457 14,949 25978 136,750 Operating income 46,141 S 493 57543 S58022 112250 Avery Okie Wizard Grainger Duran 120 Number of service calls Number of web-based parts orders Number of bills (or reminders) 150 20 30 240 210 90 40 180 60 150 60 90 120