Menu
support@graduatecourseshelp.com
+1(805) 568 7317

customer profitability lighthouse company divides its customers into premium custome 691166

Customer Profitability

Lighthouse Company divides its customers into Premium customers and Standard customers. The company has one full time customer representative per 100 Premium customers and one full time customer representative per 1,000 Standard customers. Customer representatives receive salaries plus bonuses of 1 percent of customer gross margin. Lighthouse spends 80 percent of its promotion costs on Premium customers to encourage their loyalty.

Customer Costs

Total

Premium

Standard

Number of customers

10,000

2,000

8,000

Average customer representative salary

 

$60,000

$60,000

Promotion costs

$1,000,000

 

 

Average gross margin per customer

 

$ 1,500

$ 150

Required

a. What is the excess of gross margin over customer costs for each category of customer?

b. Write a short memo that evaluates customer profitability.

"Order a similar paper and get 15% discount on your first order with us
Use the following coupon
"GET15"

Order Now