Simpson Enterprises provides computer maintenance services to a broad range of customers, from local schools to small businesses to residential customers. It obtains the following information about the costs to maintain these segments.

REQUIRED:

a. Compute the segment profitability in dollars and percentages for each segment.

b. Based on these results, which segment is best for Simpson to serve? Which is worst?

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Simpson Enterprises Schools Small Businesses Residential Company Total Revenues $750,000 $1,250,000 $500,000 $2,500,000 Less: Direct labor costs $360,000 $562,500 $255,000 $1,177,500 Computer equipment costs $125,000 $200,000 $75,000 $400,000 Customer service costs $50,000 $125,000 $75,000 $250,000 Travel costs $20,000 $30,000 $50,000 $100,000 Entertainment costs $- $25,000 $- $25,000 General overhead costs $90,000 $125,000 $75,000 $290,000