Financial Managerial Accounting: P21-30A Paradise Pool Cleaning Service provides pool cleaning

Financial Managerial Accounting
P21-30A Using variable costing, service company
Paradise Pool Cleaning Service provides pool cleaning services to residential customers. The company has three employees, each assigned to specific customers. The company considers each employee’s territory as a business segment. The company incurs variable costs that include the employees’ wages, pool chemicals, and gas for the service vans. Fixed costs include depreciation on the service vans. Following is the income statement for the month of July:
Paradise Pool Cleaning Service
Income Statement
For the Month Ended July 31, 2016
Benton McMillian Faulkner Total
Service revenue 4,000 3,000 3,500 10,500
Variable costs 1,600 1,500 2,100 5,200
Contribution margin 2,400 1,500 1,400 5,300
Fixed costs 3,000
Operating income $2,300

1. Calculate the contribution margin ratio for each business segment.
2. The business segments had the following numbers of customers: Benton, 80; McMillian, 60; and Faulkner, 70. Compute the service revenue per customer, variable cost per customer, and contribution margin per customer for each business segment.
3. Which business segment was most profitable? List some possible reasons why this segment was most profitable. How might the various reasons affect the company in the long term?
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