Need business and finance help to calculate the profitability of the Chester Company account.

Nov 17th, 2015
Anonymous
Category:
Accounting
Price: $5 USD

Question description

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)

 $10.00

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

 $15,500

Number of orders

 160

Percent of orders marked rush

 70%

Calls to technical support

 80

Required:

Calculate the profitability of the Chester Company account.


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