The cost to serve all customers is $14,760 and is allocated to customer types based on the number of manager visits to customer locations for pre- and post-sales support.

The following table gives sales, product cost, and cost-to-serve data for a company that makes three product lines: A, B, and C. The company has two customer types.

	Product A			Product B			Product C
Sales		$4,700			$6,400			$30,500
Cost of sales		4,100			5,200			15,500
	Customer Type 1			Customer Type 2			Total
Product A Sales		$1,500			$3,200			$4,700
Product B Sales		2,000			4,400			6,400
Product C Sales		16,500			14,000			30,500
Manager Visits		5			19			24

1.

Determine the gross profit margin percentage of sales for each product. Which product is the most profitable?

2.

Determine the gross profit margin and the gross profit margin percentage of sales for each customer type.

3.

Determine the cost-to-serve percentage of sales for each customer type.

4.

Determine the operating income and operating income percentage of sales for each customer type.

5.

Which customer is the most profitable based the following profitability measures:

a.	Gross margin
b.	Gross margin percentage of sales
c.	Operating income
d.	Operating income percentage of sales