Determine product lines and customer profitability.
Radiant Company makes three product lines and has two customer types. Use the data in the tables below to calculate profitability. Radiant has a cost to serve all customers of $10,000 which is allocated to customer types based on the number of manager visits to customer locations for sales support.
Product Division: Shine Glow Shimmer
Sales $8,000 $20,000 $4,000
Cost of goods sold $2,000 $14,000 $2,000
Customer Types: Type A Type B
Product Shine Sales $3,000 $5,000
Product Glow Sales $19,000 $1,000
Product Shimmer Sales $2,000 $2,000
Manager Visits 4 6
Required:
- Determine the gross profit margin and gross profit margin percentage of sales for each product. Which product is the most profitable?
- Determine the gross profit margin and the gross profit margin percentage of sales for each customer type.
- Determine the cost-to-service percentage of sales for each customer type. Which customer is the most profitable and why?
9 years ago
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