Corley Communications performed a customer profitability analysis and obtained the following results for its bottom five customers:
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Question:
Corley Communications performed a customer profitability analysis and obtained the following results for its bottom five customers:
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| Customer | Customer | ||||||
Albert | $ | 525,000 | $9,450 | 1.80 | % | ||||
Brown | $ | 1,200,000 | $16,800 | 1.40 | % | ||||
Carter | $ | 1,400,000 | $5,600 | 0.40 | % | ||||
Dyson | $ | 600,000 | ($1,500 | ) | (0.25 | %) | |||
English | $ | 460,000 | ($4,140 | ) | (0.90 | %) |
Chris Corley, vice president for marketing, believes that if these five customers are dropped, the selling expenses required to serve them will be eliminated. Company revenues total $18,000,000; the current average customer profit margin is 7.2%, and net income is $400,000.
a.) Calculate the total customer net profit.
Total customer profit margin | $ |
Related Book For
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
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