Advanced Coding is a software development company that sells specialized practice management software to large professional services firms. Management has decided to analyze certain costs related to sales to determine per-customer profitability and to plan for future sales efforts. These costs include sales commissions and overhead related to the corporate jet expenses. They have determined that $200,000 of overhead costs related to the corporate jet should be assigned to individual customers.

Sales representatives are paid a commission of 5% on Gross Profit (sales less costs to develop the software). In relation to overhead costs, the sales staff used the corporate jet at a cost of $1,000 per hour for trips to customers as follows:

Customer #1: 50 hours

Customer #2: 43 hours

Customer #3: 15 hours

Customer #4: 8 hours

Customer #5: 10 hours

Gross profit per customer is as follows:

Customer #1: $340,000

Customer #2: $240,000

Customer #3: $60,000

Customer #4: $80,000

Customer #5: $60,000

(NOTE: Do not round amounts until final calculation of customer profitability, then round to the nearest dollar).

Which customer is the least profitable?

Select one:

a. Customer #1

b. Customer #2

c. Customer #3

d. Customer #4

e. Customer #5