Reference no: EM132567388
The following table gives sales, product cost, and cost-to-serve data for a company that makes three product lines: A, B, and C. The company has two customer types.
Product A Product B Product C
Sales $5,000 $6,000 $25,000
Cost of sales 4,500 4,800 15,000
Customer Type 1 Customer Type 2 Total
Product A Sales $ 500 $ 4,500 $ 5,000
Product B Sales 1,000 5,000 6,000
Product C Sales 13,000 12,000 25,000
Manager Visits 4 16 20
The cost to serve all customers is $12,000 and is allocated to customer types based on the number of manager visits to customer locations for pre- and post-sales support.
Question 1: Determine the gross profit margin percentage of sales for each product. Which product is the most profitable?
Question 2: Determine the gross profit margin and the gross profit margin percentage of sales for each customer type.
Question 3: Determine the cost-to-serve percentage of sales for each customer type.
Question 4: Determine the operating income and operating income percentage of sales for each customer type.
Question 5: Which customer is the most profitable based the following profitability measures:
- Gross margin
- Gross margin percentage of sales
- Operating income
- Operating income percentage of sales