Question Details

(Solved by Expert Tutors) Determine product lines and customer profitability.

Radi



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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DATE ANSWERED

Apr 19, 2020

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