Paragon Sports, a major sporting goods retailer, is considering upgrading its customer-support activities by improving online databases and training customer-service personnel. Consider the following data:

Current data:

ATINUAl "SIGS eerie careeearaa tar ce steeetrtte eo aere seeatene ne nathm eer ces careers $15,000,000 Average cost of sales as percent Of SAIS... citeestesr ces eanenee 60%

pve SISW(6 (26)I aR eeaeaccrant ered aero testencn eR aeonrea crceaaoearon ceca canertinace iepeennacasannes: 4%

Predictions related to new-customer service:

INCreaSeIM'ICUSTOMERSATISIACHOM Te. atic csere eee ten. co ae oscar ae 10%

Software and training costs for new CUStOMEF SEIVICE «0.0... ee $300,000 Ongoing operating costs for new CUStOMEF SEIVICE .......e cece etree $400,000 Cost savings from reduction of email reSpONSe SEFVICE ..........: eee $100,000 Additional Sales:Qnrowtht

Required

a. Prepare an analysis of the costs and benefits of Paragon Sports’ proposed customer-service improvements. (Ignore taxes.)

b. BUILD YOUR OWN SPREADSHEET. Build an Excel spreadsheet to thoroughly analyze the profitability of the proposed customer-service operation