Customer Profitability Analysis (LO5)

' 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:

Required:

Support Activity Major refinishes Touchups.....

Communication Builder AlDINGsspe oe). ans Blue Ridge ....

Bimeolairs . crx Cost per Driver oy Driver Unit Be ok ai ok orn Hours on jobs $ 60 ailig Oe ORC eee en eer Number of visits $100 noe Ree Number of calls $ 40 i, Major Refinishes Touchups - Communication :

tyre 80 150 360 acraretae 35 110 205 et acc « 42 115 190 Assuming that each of the three customers produces gross profits of $100,000, calculate the profitability from each builder after taking into account the support activity required for each builder.