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Question 3: Evaluating customer profitability You own a credit card company. You want to evaluate the profitability of customers A and B. Customer A
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 number of transactions $2,000 200 5000 BO number of customer-support calls DO 4 The only source of revenue from customers is the interest that you charge on credit card balances. You charge customers as interest rate of 10% Thus, if the credit cant 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 cat a) Compute revenue, costs, and profit margin for each costomer. Revenue Variable costs Contribution margin Allocated costs transactions Allocated costs customer supports customer A customer
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