Colise Services Is a Repair-Service Company Specializing in Small Household

question 55

Essay

Colise 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:
$\begin{array}{lrr}&\text { Customer Revenues }&\text { Customer Costs }\\\text { Marveline Burnett } & \$ 360 & \$ 270 \\\text { J Jackson } & 240 & 366 \\\text { Roger Jones } & 96 & 90 \\\text { Paul Saas } & 90 & 132 \\\text { Becky Stephan } & 420 & 264\end{array}$ Required:
a.Compute the operating income for each of the five customers.
b.What options should Colise Services consider in light of the customer-profitability results?
c.What problems might Colise Services encounter in accurately estimating the operating costs of each customer?

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Definitions:

Price-Earnings Ratio

A financial ratio that measures a company's current share price relative to its per-share earnings, used for valuing companies and comparing their financial health.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company's profits and assets.

Tempel Corporation

A specific company, possibly identified by its unique business activities, name, or industry sector. Without further context, detailed attributes cannot be provided.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, often used to evaluate the relative value of a company's shares.