Question

Handy-Man Services is a repair-service company specializing in small household jobs. Each client pays a fixed monthly service fee based on the number of rooms in the house. Records are kept on the time and material costs used for each repair. The following profitability data apply to five customers: Customer Revenues Customer Costs Marveline Burnett $300 $225 J Jackson 200 305 Roger Jones 80 75 Paul Saas 75 110 Becky Stephan 275 220 Required: a. Compute the operating income for each of the five customers. b. Which customer do they make the most net income from on a dollar basis? c. Which customer do they make the most net income from as a percentage of Customer Revenues?

Answer 1

a.

	Marveline Burnett	J Jackson	Roger Jones	Paul Saas	Becky Stephan
Customer revenue	300	200	80	75	275
Customer cost	-225	-305	-75	-110	-220
Operating income/Loss	$75	-$105	$5	-$35	$55
Net income/ loss percentage	75/300 = 25%	-105/200 = -52.5%	5/80 = 6.25%	-35/75 = -46.67%	55/275 = 20%

b.

They make the most net income from on a dollar basis from Marveline Burnett

c.

They make the most net income from as a percentage of Customer Revenues from Marveline Burnett