question archive 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 $7Additional costs if order must be expedited (rushed) $9
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 $7Additional costs if order must be expedited (rushed) $9
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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
$7Additional costs if order must be expedited (rushed)
$9.50 Customer technical support calls (per call)
$12Relationship 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
$15,000Number of orders
160Percent of orders marked rush
70%Calls to technical support
80 Required:
Calculate the profitability of the Chester Company account.g
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Sales $15,500
Product cost = 75% of 15500=11625
Number of orders 160
Ordering cost =160*7=1120
Percent of orders marked rush 70%
160*70%*8=112*8=896
Gross profit =15500-11625-1120-896=$1859
Calls to technical support 80
Cost will be =80*12=960
Relationship management costs $1200
Total cost towards the Chestor company will be =11625+960+896+1120+1200=15801
Profitability ($) =15500-15801=(301)
There is net loss of 301
