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Which customer is more profitable for the company

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Jackie Company's CFO provided the following information on last year's sales for two customers that purchased a variety of products from the company.

                                                                       Scarborough           Schultz

Sales                                                                 $900,000             $800,000

Cost of Goods Sold                                              360,000               160,000

MSDA expenses, excluding sale commissions           640,000               130,000

a. Which customer is more profitable for the company?

b. Compare a sales incentive scheme that pays 3% of sales revenue to an incentive scheme that pays 5% of customer profit. How will each scheme affect salespersons' desire to increase sales to each customer?

Reference no: EM13860346

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