The following table gives the sales, product cost, and cost-to-serve data for a merchandising store. The store has four types of merchandise and three types of customers.

The costs to serve all customers is $140,000 and is allocated to customer types based on the number of units sold.

1. Determine the gross profit margin percentage of sales for each product. Which product is the most profitable?

2. Determine the gross profit margin percentage of sales for each customer type.

3. Determine the cost-to-serve percentage of sales for each customer type.

4. Which customer is the most profitable?

5. Prepare a chart similar to Exhibit 12-18 on p. 503 that shows the customer gross margin percentage and cost-to-serve percentage for the three customers. Recommend a strategy for profit improvement for each customer.

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Product A Product B Product C Product D Sales $32,000 Sales $88,000 Sales $280,00) Sales S143,0x) Product A units Product B units Product C units Product D units Total units sold Cost of sales 20,000 Cost of sales 70,400 Cost of sales 224,00) Cost of sales 81.(0O) Customer Type 2 2,200 1,200 400 800 4,600 Customer Type 1 200 100 50 400 750 Customer Type 3 500 3,000 5,000 400) 8,900 Total Units Sold 2,900 4,300 5,450 14,250