Question
Wizard Corporation has analyzed their customer and order handling data for the past year and has determined the following costs: Order processing cost per order
Wizard Corporation has analyzed their customer and order handling data for the past year and has determined the following costs: | |||
Order processing cost per order | $7 | ||
Additional costs if order must be expedited (rushed) | $8.00 | ||
Customer technical support calls (per call) | $12 | ||
Relationship management costs (per customer per year) | $1200 | ||
In addition to these costs, product costs amount to 75% of Sales. | |||
In the prior year, Wizard had the following experience with one of its customers, Chester Company: | |||
Sales | $16,000 | ||
Number of orders | 160 | ||
Percent of orders marked rush | 70% | ||
Calls to technical support | 80 | ||
Required: | |||
Calculate the profitability of the Chester Company account. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started