Randy's Roofing is a city wide company specializing in replacing shingle roofs. Lately, Randy has been puzzled by the fact that though some of his jobs appear to make good money, he doesn't seem to come out as profitable at the end of each month as he thinks he should.

In exchange for some work on your own roof, Randy asks you to help him better understand his costs and how he can price his jobs better. He tells you his total costs are $220,000 every month and that number never changes. You ask him what are the different components of his costs and he lists them as shown below, together with what Randy says is a breakdown of where the costs are incurred.

ReplacingTravellingOfficePromotionTotalCost per

ActivityShinglesto JobsWorkfor New JobsAllocationMonth

Wages80%20%00100%$160,000

Shingles100%000100%20,000

Shingle Disposal 100%000100%5,000

Truck Expenses0100%00100%5,000

Randy`s Car0030%70%100%3,000

Randy`s Salary0020%80%100%10,000

Office Expenses0070%30%100%17,000

Total$220,000

Randy then tells you that he does 5,000 square metres of shingle roofs every month and his crews travel about 2,000 kilometres to get to and from the jobs. Last month his crews did 200 roofs. He also shows that he did a job for Leaky Eaves last month for $7,000 and he allocated $6,000 in costs, based on his usual method of allocating costs (which was an estimate of what he thought the job should cost.)

Randy said that the Leaky Eaves roof was 200 square metres and to get to the job and back to his yard was 150 kilometres.

Instructions

See if there is a way that ABC can help Randy understand whether the Leaky Eaves job actually made a profit or not. Make sure to explain your rationale for the analysis.