Kresge Lodging has an elite program for its card members. There are three levels, based on total nights stayed: Diamond (50 nights or more); Platinum (25 nights or more); and Base (fewer than 25 nights). In order to facilitate reservations and answer customer questions, Kresge Lodging provides access to special customer service representatives, who work exclusively with the designated level (Diamond, and so on). Customer representatives receive salaries plus bonuses of 5 percent of customer gross margin. The company provides various perquisites (free nights, upgrades, and so on) to its members, with 75 percent of the cost of the perquisites used for the benefit of Diamond members, 20 percent for Platinum members, and 5 percent for Base members.

Customer Costs	Total	Diamond	Platinum	Base
Number of members	159,000	20,700	54,500	83,800
Average customer representative salary		$ 79,500	$ 52,700	$ 41,800
Number of representatives	28	15	8	5
Perquisite costs	$ 6,800,000
Average annual gross margin per customer		$ 1,200	$ 400	$ 200

The gross margin received by Kresge is the amount received from the participating hotels for a customer's stay.

Required:

What is the excess of gross margin over customer costs for each category of customer?

Answer rating: 100% (QA)

To find the excess of gross margin over customer costs for each category of customer we ne... View the full answer