Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You own a credit card company. You want to evaluate the profitability of customers A and B. customer Acustomer B credit card balance $1,500 $600

image text in transcribed

You own a credit card company. You want to evaluate the profitability of customers A and B. customer Acustomer B credit card balance $1,500 $600 number of transactions 150 60 number of customer-support calls 60 3 The only source of revenue from customers is the interest that you charge on credit card balances. You charge customers an interest rate of 30%. Thus, if the credit card balance is $1,000, revenue is $1000*0.3=$300. Variable costs are zero for simplicity. From your ABC system, the activity rates are $0.75 per transaction and $6 per customer- support call. a) Compute revenue, costs, and profit margin for each customer. customer A customer B Revenue $ Variable costs Contribution margin $ Allocated costs - transactions $ Allocated costs - customer support $ $ Profit margin Enter negative numbers with a minus sign, i.e., a loss of $200 should be entered as -200, not as (200) or ($200)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Accounting Principles Volume 2

Authors: John Wild, Ken Shaw, Barbara Chiappetta

21st Edition

0077716663, 978-0077716660

More Books

Students also viewed these Accounting questions

Question

Are you a good gift giver?

Answered: 1 week ago