# Radiant Company makes three product lines

and has two customer types.? Use the data in the tables below to calculate profitability.? Radiant has a cost to serve all customers of \$10,000 which is allocated to customer types based on the number of manager visits to customer locations for sales support.

Product?Division:?????????????????????????????????????????? Shine?????????????????????? ??? Glow????? ? ? ?? ? ??? Shimmer

Sales????????????????????????????????????????????????????????????\$8,000??????????????????????? \$20,000???? ? ? ?? ? ??? \$4,000

Cost of goods sold????????????????????????? ? ? ??????????? \$2,000??????????????????????? \$14,000???? ? ? ?? ? ??? \$2,000

Customer?Types:????????????????????????????????????? ? ? ? ? ? ???? Type A?????? ? ? ? ? ? ? ? ?? Type B

Product Shine?Sales???????????????????????????????????????????????? \$3,000????? ? ? ? ? ? ? ?? ?? \$5,000

Product Glow?Sales????????????????????????????? ? ? ? ? ?? ??????? \$19,000? ? ? ? ? ? ? ?? ?????? \$1,000

Product Shimmer Sales???????????????????????? ? ? ?? ? ? ? ? ??? ? \$2,000??????? ? ? ? ? ? ? ?? \$2,000

Manager?Visits?????????????????????????????????????????????? ? ? ? ? ? ? ?????? 4?????????? ? ? ? ? ? ? ??????? 6

Required:

1. Determine the gross profit margin and gross profit margin percentage of sales for each product.? Which product is the most profitable?
2. Determine the gross profit margin and the gross profit margin percentage of sales for each customer type.
3. Determine the cost-to-service percentage of sales for each customer type.? Which customer is the most profitable and why?

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This question was answered on: Apr 19, 2020

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