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3. 4 pointa You own a credit card company. You want to evaluate the profitability of customers A and B. ustomer Allcustomer B credit card
3. 4 pointa You own a credit card company. You want to evaluate the profitability of customers A and B. ustomer Allcustomer B credit card balance $1,500 150 60 $600 number of transactions 60 number of c calls The only source of revenue rrom customers is the interest that you charge on credit card balances. You charge customers an interest rate of 10%. Thus, if the credit card balance is $1,000, revenue is s 1000+0.1=$100. Variable costs are zero for simplicity. From your ABC systen, the activity rates are s0.25 per transaction and $2 per customer-support call. a) Compute revenue, costs, and profit margin for each customer customer A customer B Variable costs ontribution margin Allocated costs transactions Allocated costs customer support ofit margin Enter negative numbers with a minus sign, i.e., a loss of $200 should be entered as-200, not as (200) or ($200). b) One of the customers is unprofitable. What can you do about this customer? (select all that apply) you cannot do anything-regardless of what you do, about 40-50% of your customers will be unprofitable. That is just the cost of doing business. increase the interest rate "fire" the customer limit the number of free customer-support calls If you get rid of customer A, profit will: O remain the same in the long term O decrease by $150 in the long term O increase by $7.5 in the long term O decrease by $7.5 in the long term
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