Question: Why is it necessary to know the profitability of customers
Why is it necessary to know the profitability of customers? If all the products of a company are profitable, shouldn’t its customers also be profitable? Explain.
Answer to relevant Questions“The more the better!” was a comment made by the CEO of a major company when asked about allocation of sales, general, and administrative costs to products. Do you agree? Explain.Longworth Manufacturing has two producing departments, machining and assembly, and two service departments, personnel and custodial. The company’s budget for April 20X1 is as follows:Longworth allocates personnel costs on ...Based on a study of operations at TCS, it was determined that “number of orders” was a better cost-allocation base for the order processing and customer service activities. The cost of the resources used by these two ...The Gibraltar Insurance Co. (GIC) established a systems department to implement and operate its own data processing systems. GIC believed that its own system would be more cost-effective than the service bureau it had been ...“Under actual overhead application, unit costs soar as volume increases, and vice versa.” Do you agree? Explain.
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