Direct Materials and Direct Labor cost of producing vacuums Factory rent and supervisor salaries Total Costs Total 315,000 150,000 465,000 21,000 Customer A Vacuums produced and sold Price paid for each vacuum by customer. Average Cost per Vacuum Revenue from customer(s) Total Cost of customer(s) Profit from customer(s) Note Assume all vacia that get prodhiced end up getting sold 2 2 $ 20,000 Customer Bi 20 $ 1,000 50 Hint these are fixed and wort change regardless of volume A B C D Using the table move, should we drop Customer A if we cannot terminate the supervisors and also are unable to break our lease for paying rent? Hint: calculate the total profit if 1) we drop A and 2) keep A as a customer. Compare the two Should we drop Customer A if we cannot terminate the supervisors and cannot stop paying factory rent if Customer A only pays $16 per vacuum? Customer B, however, would continue paying $50 even though Customer A would pay $16. Should we drop Customer A if we cannot terminate the supervisors and cannot stop paying factory rent if Customer A only pays $10 per vacuum? Customer B, however, would continue paying $50 even though Customer A would pay $10. Assuming we sell 1,000 vacuums to B at $50 per unit, how many vacuums should we sell to A at $20 in order to earn a profit of $50,000? (hint: can use Goal-seek) 1 1