Question 2 (evaluating customer profitability) You own a credit card company. You want to evaluate the profitability of two representative customers, A and B. The numbers for customers A and B are as follows:

	customer A	customer B
credit card balance	$2,000	$800
number of transactions	200	80
number of customer-support calls	80	4

Your revenues and costs for customers are as follows: * Revenues: The only source of revenue is the interest you charge on credit card balances. You charge customers an interest rate of 30% (30% APR). So, if the credit card balance is $100, your revenue is $100*0.3=$30. * Costs: based on the estimates from your ABC system, each transaction costs you $0.75, and each customer-support call costs you $6. Ignore all other costs. Required: a) compute the revenue you get from each customer, and the costs of serving each customer.

	customer A	customer B
Revenue	$	$
Cost of transactions	$	$
Cost of customer-support calls	$	$

b) compute the profit margin for each customer. If you get a negative number, enter it with a minus sign, i.e., enter negative $200 as -200 not ($200) profit margin for A = $ profit margin for B = $ c) if you solved (a) and (b) correctly, one of the customers should be unprofitable. What should you do about this customer?