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I need the last question answered Ray Panneton, president of Okus Designs, met with his CFO and vice president of marketing to discuss the profitability
I need the last question answered
Ray Panneton, president of Okus Designs, met with his CFO and vice president of marketing to discuss the profitability of the company's top 10 customers. These customers account for 80% of the company's revenues. The following table was prepared by the accounting department to assist Ray in his decision making. Cost of Sales Customer Net Profit Revenues $ 4,958,000 4,899,000 Customer Profit Margin 9.0% 7.3% 448,000 355,400 0.5% 4,505,000 4,204,000 Customer Meredith's Boutique Stewart Industries T&P Incorporated Talley Design Studios UPPtown Productions O'Brien's Tavern House of Claire Copper Metalworks J Floral Designs Old Main Masonry Total/Average (2.8%) 8.2% 4,110,000 3,903,000 Selling Costs $760,000 925,000 1,080,500 1,130,000 902,000 875,000 685,000 1,350,000 1,486,250 770,000 $9,963,750 $3,750,000 3,618,600 3,400,000 3,192,000 2,870,000 2,850,000 2,887,500 2,664,000 2,501,250 2,485,000 $30,218,350 4.6% 3,852,000 3,709,000 3,630,000 3,503,000 $41,273,000 24,500 (118,000) 338,000 178,000 279,500 (305,000) (357,500) 248,000 1,090,900 7.3% (8.2%) (9.8%) 7.1% 2.6% Your answer is correct. (a) Ray is concerned about the customers with negative customer profit margins. If these customers are dropped, what will be the new total customer net profit and customer profit margin (assume the cost of sales and selling costs can be eliminated)? (Round customer profit margin to 1 decimal place, eg. 15.2%.) Customer net profit 1871400 Customer profit margin 6.3 % Ray is also concerned about customers with customer profit margins below the current company average. If all customers with below-average profit margins are dropped, what will be the new total customer net profit and customer profit margin (assume the cost of sales and selling costs can be eliminated)? (Round customer profit margin to 1 decimal place, e.g. 15.2%.) Customer net profit 1846900 Customer profit margin 7.3 % If Ray were to drop all customers with profit margins below average, how much in new customer revenues would need to be added to make the company as well off as it would be if it only dropped the customers with negative profit margins? Use an average profit margin for the new customers equal to the one you calculated in part (a). (Round answer to O decimal places, eg. 12,525.) Revenues to be generated by new customers $ Save for Later Attempts: unlimited SubmitStep by Step Solution
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