Felicity Pool Cleaning Service provides pool cleaning services to residential customers. The company has three employees, each

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Felicity 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:
Felicity Pool Cleaning Service provides pool cleaning services to residential

Requirements
1. Calculate the contribution margin ratio for each business segment.
2. The business segments had the following numbers of customers: Borden, 50; Morrissey, 90; and Flounder, 100. 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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Horngrens Financial and Managerial Accounting

ISBN: 978-0133866292

5th edition

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

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