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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.
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. 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 Revenues $ 4,958,000 4,899,000 4,505,000 4,204,000 4,110,000 3,903,000 3,852,000 3,709,000 3,630,000 3,503,000 $41,273,000 Cost of Sales $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 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 Customer Net Profit 448,000 355,400 24,500 (118,000) 338,000 178,000 279,500 (305,000) (357,500) 248,000 1,090,900 Customer Profit Margin 9.0% 7.3% 0.5% (2.8%) 8.2% 4.6% 7.3% (8.2%) (9.8%) 7.1% 2.6% 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 $ Customer profit margin %
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