=+9-17 KK Customer profitability, service company OBJECTIVE 8 Spot On (SO) repairs printers and photocopiers for five multisite companies in a tristate area. SO’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, SO estimated customer profitability by allocating the office overhead to each customer based on share of revenues. For 2014, SO reported the following results:

867 000 1

2 3

4 5

A B C D E F G Avery Okie Wizard Grainger Duran Total Revenues 260 000 200 000 322 000 122 000 212 000 1 116 000$

Technician and equipment cost 182 000 175 000 225 000 107 000 178 000 Office overhead allocated 31 859 24 507 39 457 14 949 25 978 136 750 Operating profit 46 141$ 493$ 57 543$ 51$ 8 022$ 112 250$

$ $ $ $ $