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Cool Painting Services, Inc. provides residential painting services for three home building companies, Glen Oaks, Streamwood, and Buckington, and it uses a job costing system
Cool Painting Services, Inc. provides residential painting services for three home building companies, Glen Oaks, Streamwood, and Buckington, 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 Cool for return touchups and refinishes after the homeowner occupies the home. Cool 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 Cool owner has observed that the builders, however, require substantially different levels of support following the completion of jobs. The following data have been gathered: Cost per Driver Support Activity Driver Unit Major refinishes Hours on jobs $40 Touchups Number of visits $60 Communication Number of calls $12 Major Builder Refinishes Touchups Communication Glen Oaks 70 125 39 Streamwood 125 105 180 Buckington 305 180 175 Assume that each of the three builders produces Gross Profit of $55,000. The net profit from each builder after taking into account the support activity required for each builder is
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