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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
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 comp 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: Support activity Driver Major refinishes Hours on jobs Cost per Driver Unit s60 100 40 Number of visits Communication Number of calls Builder Major Refinishes Touchups Communication Alpine Blue Ridge Pineola 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 80 35 42 150 110 115 360 205 190 Pineola Alpine Blue Ridge Refinishes Touchups Communication gathered Support activity Driver Major refinishes Hours on jobs Touchups Number of visits Communication Number of calls Cost per Driver Unit $60 100 40 Builder Major Refinishes Touchups Communication Alpine Blue Ridge Pineola 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. 150 110 115 80 35 42 360 205 190 Alpine Blue Ridge Pineola Refinishes Touchups Total support costs Gross profit Customer profits Check
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