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 as all refinishes and touchups required after the homes are occupied. Each year, Hystandard 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 Costs per Driver Unit Major refinishes Hours on jobs $ 75 Touchups Number of visits $ 120 Communication Number of calls $ 30

Builder Major Refinishes Touchups Communication

Apline 80 150 360

Blue Ridge 35 110 205

Piola 42 115 190

(a) 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..

Alpine $Answer

Blue Ridge $Answer

Piola $Answer

Support Activity Costs per Driver Unit Driver Major refinishes Hours on jobs Number of visits Communication Number of call:s $ 75 120 % 30 Touchups Major Refinishes Builder Touchups Communication Apline Blue Ridge Piola 150 110 115 360 205 190 80 35 (a) 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. Alpine Blue Ridge $ 0 Piola $ 0