Wizard Corporation has analyzed their customer and order handling data for the past year and has determined
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Question:
Wizard Corporation has analyzed their customer and order handling data for the past year and has determined the following costs: | |||
Order processing cost per order | $7 | ||
Additional costs if order must be expedited (rushed) | $8.00 | ||
Customer technical support calls (per call) | $12 | ||
Relationship management costs (per customer per year) | $1200 | ||
In addition to these costs, product costs amount to 75% of Sales. | |||
In the prior year, Wizard had the following experience with one of its customers, Chester Company: | |||
Sales | $16,000 | ||
Number of orders | 160 | ||
Percent of orders marked rush | 70% | ||
Calls to technical support | 80 | ||
Required: | |||
Calculate the profitability of the Chester Company account. |
Posted Date: