Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tri-city 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 2015, IS reported the following results:

Tina Sherman, IS's new controller, notes that office overhead is more than 10% of total costs, so she spends a couple of weeks analyzing the consumption of office overhead resources by customers. She collects the following information:
Activity Area Cost Driver Rate
Service-call handling ........................... $75 per service call
Parts ordering ........................... 80 per web-based parts order
Billing and collection .................... 50 per bill (or reminder)
Customer database maintenance ............... 10 per service call

Required
1. Compute customer-level operating income using the new information that Sherman has gathered.
2. Prepare exhibits for IS similar to Exhibits 16-10 and 16-11 . Comment on the results.
3. What options should IS consider, with regard to individual customers, in light of the new data and analysis of office overhead?

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Avery Okie Wizard Grainger DuranTotal S260,000 $200,000 S322,000 S122,000 S212,000 $1,116,000 Revenues Technician and equipment cost 182,000 75000 225,000 07,000 178,000 867,000 Office overhead allocated 31,859 24,50739,457 14,949 25978 136,750 Operating income 46,141 S 493 57543 S58022 112250 Avery Okie Wizard Grainger Duran 120 Number of service calls Number of web-based parts orders Number of bills (or reminders) 150 20 30 240 210 90 40 180 60 150 60 90 120