Rays Manufacturing makes electronic components. The company has two main customers. Information related to each customer is
Question:
Ray’s Manufacturing makes electronic components. The company has two main customers. Information related to each customer is shown below:
a. Prepare a customer profitability analysis.
b. Ray is currently using his full capacity to service Customers A and B. Ray has the option to use his full capacity to serve Customer B, who would to like to purchase more components. Should he consider this option? Why or why not?
Transcribed Image Text:
Customer A Customer B Revenues $300,000 $531,250 Units Sold 60,000 125,000 Units per Order 1,000 900 Price per Unit $5.00 $4.25 Cost per Unit $2.50 $2.25 Net Profit $150,000 $250,000 Customer Specific Costs: Order taking $100 per order Product handling $0.10 per unit sold Delivery $50 per order
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