Q1.3 "Individual customer satisfaction does not necessarily lead to customer profitability. Moreover, there are many other factors that may assist in understanding and managing the firms customers" (Explain the statement)

Aav a - v D V A v = Styles Styles Pane Question 1: Managing Customers [15 marks] Question 1.1 Custom Course Packets has hired you to calculate the profitability of its three customer groups. Here are the revenues and directly traceable costs for each customer group: Individual Corporate University Total Customers Customers Customers Revenues $600,000 $750,000 $700,000 $2,050,000 Direct Costs $450,000 $562,500 $525,000 $1,537,500 In addition, there are $130,000 in costs that cannot be directly traced to the customer groups. You have decided to use activity-based costing to allocate the costs to each customer group. Here are the cost pools (along with the respective activity base) for the company as a whole: Activity Cost Pool Activity Base Quantity Ordering costs $80,000 No. of customer orders 40,000 Product design costs $20,000 No. of product designs 400 Customer service costs $30,000 No. of customer complaints 500 Below are the activity levels for each customer type: Individual Corporate University Customers Customers Customers No. of customer orders 30,000 15,000 13,000 No. of product designs 220 110 130 No. of customer complaints 250 150 190 Required: + Question 1.1.1 Prepare a customer profitability analysis for each customer group and comment on their relative profitability. [Word limit for later part: 100 words. Note the word count at the end of your answer] (6 marks) Your Answer (expand the space as required): Word count: Question 1.1.2 Would you recommend dropping the customer group that generate the lowest profit? Explain your answer. [Word limit: 100 words. Note the word count at the end of your answer] (3 marks) Your Answer (expand the space as required): ew Zealand) Focus