HyStandard Services, Inc. provides residential painting services for three home
ID: 2537071 • Letter: H
Question
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:
Driver
Number of visits
Number of calls
Builder
Assuming that each of the three customers produces gross profits of $140,000, calculate the profitability from each builder after taking into account the support activity required for each builder.
Support activityDriver
Cost per Driver Unit Major refinishes Hours on jobs $90 TouchupsNumber of visits
100 CommunicationNumber of calls
40Explanation / Answer
Activity Alpine Blue Ridge Pineola Refinishes 80*90= 7200 35*90= 3150 42*90= 3780 Touchups 150*100= 15000 110*100= 11000 115*100= 11500 Communication 360*40= 14400 205*40= 8200 190*40= 7600 Total support costs 36600 22350 22880 Gross profit 140000 140000 140000 Customer profits 103400 117650 117120
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