You have just started an internship with Frode Laursen and you have spent your first day together with a Key Account Manager (KAM), who handles transactions with three different customer segments (A, B and C).

He proudly tells you that his focus is on serving the A customers since they yield the highest contribution margin per transaction. Then come the B customers, and if there is time left, he also serves the C customers.

Upfront, his argument sounds logical, but from your studies, you recall that there might be other aspects to consider. You take on the task of collecting data for a typical workday for a KAM.

The Key Account Manager has a daily practical capacity of seven working hours.

Data of the customer segments have been collected, and are included in the table below:

	Revenue per transaction	Costs per transaction	Time per transaction in hours	Demand per day (transactions)
Segment A	1,000	500	0.75	5
Segment B	700	400	0.25	14
Segment C	400	200	0.20	10

On an average workday, the Key Account Manager makes 5 transactions with the A customers, 13 with the B customers and 0 with the C customers.

The daily contribution margin is displayed in the table below:

	Segment A	Segment B	Segment C	Total
Revenue	5,000	9,100	0	14,100
Variable costs	2,500	5,200	0	7,700
Contribution margin	2,500	3,900	0	6,400

1. Calculate and suggest a more optimal allocation of transactions with the customers from a pure Management Accounting point of view and calculate the contribution margin based on your suggestion.

2. Discuss briefly if there are other considerations you would include in your suggestion.