Question 1: Managing Customers [15 marks] Question 1.1 Custom Course Packets has hired you to calculate the profitability of its three customer types. Here are the revenues and directly traceable costs for each customer type: Individual Corporate University Total Customers Customers Customers Revenues $600,000 $750,000 $700,000 $2,050,000 Direct Costs $450,000 $562,500 $525,000 $1,537,500 In addition, there are $130,000 in costs that cannot be directly traced to the customer types. You have decided to use activity-based costing to allocate the costs to each customer type. Here are the estimated cost pools (along with the respective activity measures) for the company as a whole: Activity Ordering costs Product design costs Customer service costs Cost Pool $80,000 $20,000 $30,000 Activity Base No. of customer orders No. of product designs No. of customer complaints Quantity 40,000 400 500 Below are the actual activity levels for each customer type: Individual Customers Corporate Customers No. of customer orders 30,000 15,000 No. of product designs 220 110 No. of customer complaints 250 150 University Customers 13,000 130 190 Required: Question 1.1.1 Prepare a customer profitability analysis for each customer group and comment on their relative profitability. [Word limit for later part: 100 words. Note the word count at the end of your answer] (6 marks) Your Answer (expand the space as required): Word count: Question 1.1.2 Would you recommend dropping the customer group that generate the lowest profit? Explain your answer. [Word limit: 100 words. Note the word count at the end of your answer] (3 marks) Your Answer (expand the space as required): Word count: Question 1.2 Individual customer satisfaction does not necessarily lead to customer profitability. Moreover, there are many other factors that may assist in understanding and managing the firms' customers. Explain the statement. [Word limit: 200 words. Note the word count at the end of your answer] (6 marks) Your Answer (expand the space as required): Word count