# HomeInsertPage LayoutFormulasDataReviewViewDOkieWizardDuranTotalGrainger\$390,000 \$300,000 \$483,000| \$183,000337,500 160,50022,423740 \$ 86,314| \$Avery2 Revenues3 Technician and equipment cost4 Office overhead allocated5 Operating income\$318,000 \$1,674,000267,0001,300,500205,12538,96777 \$ 12,033 \$ 168,375273,000262,50047,78959,18636,760\$ 69,211| \$Abby Costa, IS's new controller, notes that office overhead is more than 10% of total costs, so she spendsa couple of weeks analyzing the consumption of office overhead resources by customers. She collects thefollowing information:HomeInsertPage LayoutFormulasDataReviewCost Driver Rate\$85 per service call\$80 per Web-based parts order\$50 per bill (or reminder)Activity Area2 Service call handling3 Parts ordering4 Billing and collection HomeInsertPage LayoutFormulasDataReviewViewABAvery Okie Wizard Grainger Duran9 Number of service calls10 Number of Web-based parts orders11 Number of bills (or reminders)225360601802701803159022522545135135901801. Compute customer-level operating income using the new information that Costa has gathered.2. Prepare exhibits for IS similar to Exhibits 14-4 and 14-5. Comment on the results.3. What options should IS consider, with regard to individual customers, in light of the new data andanalysis of office overhead?Required

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Customer profitability, service company. Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tristate area. IS’s costs consist of the cost of technicians and equipment that are directly traceable to the customer site and a pool of office overhead. Until recently, IS estimated customer profitability by allocating the office overhead to each customer based on share of revenues. For 2017, IS reported the following results:

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Step 1

1.

Compute the customer level operating income.

Step 2

2.

Prepare the exhibit for I and comment on the result.

Step 3

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