Question

Wingo Widgets makes and sells widgets to individual and corporate customers. Widgets cost $1.75 to make and are sold for $3.00 each. Individual customers typically require little service beyond order processing. Because widgets don't differ much from one producer to the next, corporate customers demand additional services before they will commit to a purchase. Wingo's selling activities and cost pools are as follows:


The following table compares the activity levels for the average individual customer and the average corporate customer:




Required

a. Calculate the activity rate for each cost pool.
b. Calculate the customer net profit and customer profit margin for the average individual customer and the average corporate customer.
c. If Wingo wanted to drop one average corporate customer, how many average individual customers would need to be added to make up the lost netincome?


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  • CreatedFebruary 21, 2014
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