Question

Delta Products has determined the following costs:
Order processing (per order)............... $ 6.00
Additional handling costs if order marked rush (per order).... $10.00
Customer service calls (per call)................ $12.00
Relationship management costs (per customer per year)...... $3,000
In addition to these costs, product costs amount to 85 percent of sales. In the prior year, Delta had the following experience with one of its customers, Johnson Brands:
Sales ............. $52,000
Number of orders......... 250
Percent of orders marked rush ... 70%
Calls to customer service...... 160

Required
Calculate the profitability of the Johnson Brands account.



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  • CreatedSeptember 23, 2013
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