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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) $10.00 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 $15,500Number of orders 160Percent of orders marked rush 70% Calls to technical support 80
Required:
Problem 1: Calculate the profitability of the Chester Company account.
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