Premier Painting Services, Inc. provides residential painting services for three home building companies, Glendale, Highwood, and Lexington, 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 Premier for return touchups and refinishes after the homeowner occupies the home. Premier 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 Premier owner has observed that the builders, however, require substantially different levels of support following the completion of jobs.
The following data have been gathered:
$$\begin{array} {cc}
\begin{array} { l l c c }
\hline\textbf { Support Activity} &\textbf{Driver} &\textbf{Cost per Driver Unit }\
\hline\text { Major refinishes } & \text { Hours on jobs } & \$ 40 \
\text { Touchups } & \text { Number of visits } & \$ 60 \
\text { Communication } & \text { Number of calls } & \$ 12
\end{array}\\
\begin{array}{lccc}
\hline \textbf { Builder } & \textbf { Major Refinishes } & \textbf { Touchups } & \textbf { Communication } \
\hline\text { Glendale } & 70 & 125 & 39 \
\text { Highwood } & 125 & 105 & 180 \
\text { Lexington } & 305 & 180 & 175
\end{array}
\end{array}$$ Assume that each of the three customers produces Gross Profit of $50,000.
The profitability from each builder after taking into account the support activity required for each builder is:

Question

Premier Painting Services, Inc. provides residential painting services for three home building companies, Glendale, Highwood, and Lexington, 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 Premier for return touchups and refinishes after the homeowner occupies the home. Premier 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 Premier owner has observed that the builders, however, require substantially different levels of support following the completion of jobs.
The following data have been gathered:
$$\begin{array} {cc} 
\begin{array} { l l c c } 
\hline\textbf { Support Activity} &\textbf{Driver} &\textbf{Cost per Driver Unit }\
\hline\text { Major refinishes } & \text { Hours on jobs } & \$ 40 \
\text { Touchups } & \text { Number of visits } & \$ 60 \
\text { Communication } & \text { Number of calls } & \$ 12
\end{array}\\
\begin{array}{lccc}
\hline \textbf { Builder } & \textbf { Major Refinishes } & \textbf { Touchups } & \textbf { Communication } \
\hline\text { Glendale } & 70 & 125 & 39 \
\text { Highwood } & 125 & 105 & 180 \
\text { Lexington } & 305 & 180 & 175
\end{array}
\end{array}$$ Assume that each of the three customers produces Gross Profit of $50,000.
The profitability from each builder after taking into account the support activity required for each builder is:

Quizplus · Accepted Answer

The Answer of Premier Painting Services, Inc. provides residential painting services for three home building companies, Glendale, Highwood, and Lexington, 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 Premier for return touchups and refinishes after the homeowner occupies the home. Premier 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 Premier owner has observed that the builders, however, require substantially different levels of support following the completion of jobs.
The following data have been gathered:
$$\begin{array} {cc} 
\begin{array} { l l c c } 
\hline\textbf { Support Activity} &\textbf{Driver} &\textbf{Cost per Driver Unit }\
\hline\text { Major refinishes } & \text { Hours on jobs } & \$ 40 \
\text { Touchups } & \text { Number of visits } & \$ 60 \
\text { Communication } & \text { Number of calls } & \$ 12
\end{array}\\
\begin{array}{lccc}
\hline \textbf { Builder } & \textbf { Major Refinishes } & \textbf { Touchups } & \textbf { Communication } \
\hline\text { Glendale } & 70 & 125 & 39 \
\text { Highwood } & 125 & 105 & 180 \
\text { Lexington } & 305 & 180 & 175
\end{array}
\end{array}$$ Assume that each of the three customers produces Gross Profit of $50,000.
The profitability from each builder after taking into account the support activity required for each builder is:

Premier Painting Services, Inc Assume That Each of the Three Customers Produces Gross Profit