Ajax Pool Services does a wide range of pool maintenance and repair jobs over the course of

Question:

Ajax Pool Services does a wide range of pool maintenance and repair jobs over the course of a swimming season in New England. The company has five vans and five work crews. Some crews consist of one repair person, while others contain five workers for such things as opening and closing pools, which is very labor- intensive. There are also various machines and support work that is needed for the different kinds of jobs. Right now, Ajax charges materials directly to a job, and then adds a charge based on direct labor hours to account for the rest of the costs of running the business. Ajax adds 35% profit onto every job because the season is short, so the work that is done has to support the company during the lean winter months. Recently, Ajax has been losing customers to a new competitor in town, Swim Lanes. Tom Aaron, the owner of Ajax , has asked you to help him complete an activity-based analysis of his company to see if he can figure out why he is losing most of his repair business. The nonmaterial costs for running the business are $1,650,000 per year. There are 50,000 direct labor hours expended each season. Tom wants you to look at three specific jobs to help him figure out what is happening. You work for a week and develop the following information on Tom’s operations and three recent jobs.