Customer Profitability Analysis

Customer Profitability Analysis 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 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: Support activity Driver Cost per Driver Unit Mayor refimshes Hours on jobs Touchups Number of visits Communication Number of calls $200 100' 40 il Major Refinishes Touchups Communication Algene Biue 80 j 35 42 150 110 115 360 205 190 Assuming that each of the three customers produces gross profits of $170,000, calculate the profitability from each builder after taking into account the support activity required for each builder. Actiy_icy Refinishes Touchups Blue Ridge P_tneola IS Communication Total support costs S Gross profit Customer profits