Customer costing, service company. Instant Service (IS) is a repair service company specializing in the rapid repair of photocopying machines. Each of its 10 clients pays a fixed monthly service fee (based on the type of photocopying machines owned by that client and the number of employees at that site). IS keeps records of the time technicians spend at each client as well as the cost of the equipment used to repair each photocopying machine. IS recently decided to compute the profitability of each customer. The following data pertain to May 194 (in thousands):

Customer Customer Revenues Costs Avery Group

$260 Duran Systems $182 180 184 Retail Systems 163 178 Wizard Partners 322 225 Santa Clara College 235 308 Grainger Services 80 74 Software Partners 174 100 Problem Solvers 76 108 Business Systems 137 110 Okie Enterprises 373 231 Required 1. Compute the operating income of each customer. Prepare for Instant Service an exhibit sim- ilar to Exhibit 4-10. Comment on the results.

2. What options should Instant Service consider in light of your customer-profitability analysis in requirement 1?

3. What problems might Instant Service encounter in accurately estimating the operating cost of each customer?