Triumph Corporation has analyzed their customer and order handling data for the

Question

Triumph Corporation has analyzed their customer and order handling data for the past year and has determined the following costs:

Order processing cost per $8.00

Additional costs if under

must be expedited (rushed) $9.00

Customer technical support $13.00

Relationship management

costs (Per customer per year) $1,800.00

In addition to these costs, product costs amount to 80% of sales.

In the prior year, triumph had the following experience with one of its customers, Julius Company:

Sales $20,000

Number of orders 170

Percent of orders marked rush 80%

Calls to technical support 90

REQUIRED:

Calculate the profitability of the Julius Company account.

Sales Amount

Less:

Title? Formula?

Title? Formula?

Title? Formula?

Title? Formula?

Title? Formula? Formula?

Profitability of Julius

Company account Formula?

Explanation / Answer

Hi,

Please find the answer as follows:

Thanks.

Sales 20000 Less Product Costs 16000 Less Order Processing Costs (170*8) 1360 Less Additional costs if order
must be expedited (rushed) (170*.80*9) 1224 Less Customer Technical Support (90*13) 1170 Less Relationship Management Costs 1800 Profitability of Julius Company Account -1554

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