Question 12. 12. Q18-3: SkinTan?s top five customers generate sales revenue of 950,000 per annum. Each generates a different gross margin as a consequence of price negotiations that have been carried out over several years. Because of their location, each customer incurs different distribution expenses. Sales commissions are paid at the rate of 6% on all sales. Fixed costs are customer specific, covering salaries of sales and office staff who service each customer. The following table shows the information for each of the top customers for the previous year. Sales | 250,000 | 250,000 | 200,000 | 150,000 | 100,000 | Gross margin % | 30% | 25% | 21% | 37% | 39% | Distribution expenses | 30,000 | 14,000 | 25,000 | 12,000 | 6,000 | Fixed costs | 30,000 | 25,000 | 16,000 | 15,000 | 10,000 |
Carry out a customer profitability analysis in relation to SkinTan?s top customers. Then match the customer with the profitability. (Points : 10) |