Problem:
Homeland Research Services (HRS) conducts personnel background checks and supplier reliability research for government agencies and corporations. Using the following information, prepare a customer profitability statement showing a desire to increase its return on sales to 20 percent.
Personnel Supplier
HRS Profitability Total Checks Reliability
Contribution margin ratio 61.8% 65.0% 60.0%
Revenues $11,000,000 $4,000,000 $7,000,000
Customer Sales to Government
Sales of: Agencies Corporations
Personnel Checks 100% 80% 20%
Supplier reliability 100% 20% 80%
Operating costs traced to customers $5,500,000 $1,400,000 $4,100,000