Secure Data provides onsite data storage and server management services for five multisite companies in a tristate area. Secure Data’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, Secure Data estimated customer profitability by allocating the office overhead to each customer based on revenues. For 2012, Secure Data reported the following results:

Todd Burns, Secure Data’s new controller, notes that office overhead is more than 10% of total costs, so he spends a couple of weeks analyzing the consumption of office overhead resources by customers. He collects the following information:

1. Compute customer- level operating income using the new information that Todd has gathered. 2. Prepare exhibits for Secure Data similar to Exhibits 7- 8 and 7- 9. Comment on the results. 3. What options should Secure Data consider for individual customers in light of the new data and analysis of officeoverhead?

  • CreatedJanuary 15, 2015
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