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Handy-Man Services is a repair-service company specializing in small household jobs. Each client ...

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Handy-Man Services is a repair-service company specializing in small household jobs. Each client ...

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   350   220

Required:
a.   Compute the operating income for each of the five customers.
b.   What options should Handy-Man Services consider in light of the customer-profitability results?
c.   What problems might Handy-Man Services encounter in accurately estimating the operating costs of each customer?

Textbook

Cost Accounting: A Managerial Emphasis, Canadian Edition

Edition: 7^th

Authors: Horngren, Datar, Rajan, Beaubien

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