Question 3: 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 $1,500 150 60 $600 number of transactions 60 number of customer-support calls The only source of revenue from customers is the interest that you charge on credit card balances. You charge customers an interest rate of 30%. Thus, if the credit card balance is $1,000, revenue is $1000*0.3-$300 Variable costs are zero for simplicity. From your ABC system, the activity rates are $0.75 per transaction and $6 per customer-support call. a) Compute revenue, costs, and profit margin for each customer customer A customer B Revenue Variable costs Contribution margin Allocated costs -transactions Allocated costs customer support$ 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). b) One of the customers is unprofitable. What can you do about this customer? (select a that apply) limit the number of free customer-support calls increase the interest rate you cannot do anything-regardless of what you do, about 40-50% of your customers will be unprofitable. That is just the cost of doing business. "fire" the customer If you get rid of customer A, profit will: decrease by $22.5 in the long term remain the same in the long term increase by $22.5 in the long term decrease by $450 in the long term