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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 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, 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: Cost per Driver Unit $60 100 40 Support activity Driver Major refinishes Touchups Hours on jobs Number of visits Communication Number of calls Builder Major Refinishes Touchups Alpine 150 Blue Ridge 110 Pineola 115 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. Activity. Refinishes Touchups $ Communication Total support costs $ Gross profit Customer profits $ 80 35 42 Alpine 0 x $ 0x 0x 0x $ 0x 0 x $ Communication Blue Ridge 0 x $ 0 x 0x 0 x $ 0x 0 x $ 260 105 90 Pineola 0 x 0 x 0x 0x 0x 0 x

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, 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: Cost per Driver Unit $60 100 40 Support activity Driver Major refinishes Touchups Hours on jobs Number of visits Communication Number of calls Builder Major Refinishes Touchups Alpine 150 Blue Ridge 110 Pineola 115 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. Activity. Refinishes Touchups $ Communication Total support costs $ Gross profit Customer profits $ 80 35 42 Alpine 0 x $ 0x 0x 0x $ 0x 0 x $ Communication Blue Ridge 0 x $ 0 x 0x 0 x $ 0x 0 x $ 260 105 90 Pineola 0 x 0 x 0x 0x 0x 0 x

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 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, 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: Cost per Driver Unit $60 100 40 Support activity Driver Major refinishes Touchups Hours on jobs Number of visits Communication Number of calls Builder Major Refinishes Touchups Alpine 150 Blue Ridge 110 Pineola 115 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. Activity. Refinishes Touchups $ Communication Total support costs $ Gross profit Customer profits $ 80 35 42 Alpine 0 x $ 0x 0x 0x $ 0x 0 x $ Communication Blue Ridge 0 x $ 0 x 0x 0 x $ 0x 0 x $ 260 105 90 Pineola 0 x 0 x 0x 0x 0x 0 x
Transcribed Image Text: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, 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: Cost per Driver Unit $60 100 40 Support activity Driver Major refinishes Touchups Hours on jobs Number of visits Communication Number of calls Builder Major Refinishes Touchups Alpine 150 Blue Ridge 110 Pineola 115 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. Activity. Refinishes Touchups $ Communication Total support costs $ Gross profit Customer profits $ 80 35 42 Alpine 0 x $ 0x 0x 0x $ 0x 0 x $ Communication Blue Ridge 0 x $ 0 x 0x 0 x $ 0x 0 x $ 260 105 90 Pineola 0 x 0 x 0x 0x 0x 0 x
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