Question: The customer profitability analysis for Patio Grill Company which is displayed

The customer-profitability analysis for Patio Grill Company, which is displayed in Exhibit 5–14, ranks customers by operating income. An alternative, often-used approach is to rank customers by sales revenue.
In Exhibit 5–14,

1. List the customer numbers in the left-hand column of Exhibit 5–14 by sales revenue, from highest to lowest. Is the ranking different from that in Exhibit 5–14?
2. Patio Grill Company’s smallest customers, in terms of sales revenue, are last in the listing prepared for requirement (1). Are these customers the company’s least profitable?
3. Would the customer-profitability profile in Exhibit 5–15 be different if the customers were ranked by sales revenue instead of operating income? Explain.
4. What factors could cause a larger customer (in terms of sales revenue) to be less profitable than a smallercustomer?
View Solution:

Sale on SolutionInn
  • CreatedApril 22, 2014
  • Files Included
Post your question