(Answered) Problem - customer profitability analysis delta products

Accounting

Problem - Customer Profitability Analysis. Delta Products has determined the following costs:

Order processing (per order) - $6

Additional handling costs if order marked rush (per order) - $11

Customer service calls (per call) - $12

Relationship management costs (per customer per year) - $3,500

In addition to these costs, product costs amount to 85 percent of sales. In the prior year, Delta had the following experience with one of its customers, Johnson Brands:

Sales - $55,000

Number of orders marked rush - 250

Percent of orders marked rush - 70%

Calls to customer service - 160

Required - Calculate the profitability of the Johnson Brands account.

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