Sylvester Steel manufactures specialty steel in various forms (ingots, wires, rounds, and so on). In essence, the firm melts scrap steel, adds trace elements (e.g., magnesium), and processes the resulting alloy. The firm has provided you with data regarding the following three customers.

Sylvester’s management gives the following results from a detailed study of its cost structure.

Required:
a. Compute the profitability of the three representative customers.
b. What actions do you recommend that Sylvester initiate to improve the profitability of these representativecustomers?

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Customer A Customer B Customer C S1.3 million S1.2 milion $850.000 30% 4 Annual sales vohume Average contribution margin ratio (based on last year's mix) Number of orders Number of shipments Number of order changes Days outstanding for receivables (average) Rcgucsts for ncw 25% 12 12 29 38 Sylvester offers l % cash discount if the invoice is paid within 10 days of invoicing date. (Al invoices are transmitted electronically) Revenue/Cost S300 per order $500 per shipment transaction Number of ord Number of shipments Number of order changes 2,500 per change Cost of capital Requests for new products $10,000 to develop a new product ers 15%