Evaluating customer profitability You own a credit card company. You want to evaluate the profitability of customers A and B.

	customer A	customer B
credit card balance	$1,000	$400
number of transactions	100	40
number of customer-support calls	40	2

The only source of revenue from 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 $1000*0.1=$100. Variable costs are zero for simplicity. From your ABC system, the activity rates are $0.25 per transaction and $2 per customer-support call. a) Compute revenue, costs, and profit margin for each customer.

	customer A	customer B
Revenue	$	$
Variable costs	$	$
Contribution margin	$	$
Allocated costs - transactions	$	$
Allocated costs - customer support	$	$
Profit margin	$	$

Enter negative numbers with a minus sign, i.e., a loss of $200 should be entered as -200, not as (200) or ($200).