Elite Services, Inc. provides residential painting services for three home build

Question

Elite Services, Inc. provides residential painting services for three home building companies, Brookside, Edgewater, and Hillrose, 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 Elite for return touchups and refinishes after the homeowner occupies the home. Elite 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 Elite owner has observed that the builders, however, require substantially different levels of support following the completion of jobs. The following data have been gathered:

  
Assuming that each of the three customers produces gross profits of $125,000, calculate the profitability from each builder after taking into account the support activity required for each builder.

Brookside $

Edgewater $

Hillrose $

Support Activity Driver Costs per Driver Unit Major refinishes Hours on jobs $ 80 Touchups Number of visits $ 130 Communication Number of calls $ 25

Explanation / Answer

Buidler Gross Profit Major Refinishes Touchups Communication Profit Brook side        1,25,000 10,400 32,500 15,250      66,850 130 X 80 250 X 130 610 X 25 Edge Water        1,25,000 5,600 27,300 9,125      82,975 70 X 80 210 X 130 365 X 25 Hillrose        1,25,000 6,320 27,950 8,750      81,980 79 X 80   215 X 130 350 X 25

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.