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Problem - 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
Name Revenues Costs
Steve Dickerson
Mario Nieves $700 $595
Wilma Rudolph $350 $425
Ho Chi $170 $155
Sandi Diesem $95 $125
$4,495 $215
Question 1: Compute the operating income for each of the five customers.
Question 2: What options should Handy-Man Services consider in light of the customer-profitability results?
Question 3: What problems might Handy-Man Services encounter in accurately estimating the operating costs of each customer?
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