Wizard Corporation has analyzed their customer and order handling data for the past year and has determined the following costs:
Order processing cost per order $7
Additional costs if order must be expedited (rushed) $10.00
Customer technical support calls (per call) $12
Relationship management costs (per customer per year) $1200
In addition to these costs, product costs amount to 75% of Sales.
In the prior year, Wizard had the following experience with one of its customers, Chester Company:
Sales $15,000
Number of orders 160
Percent of orders marked rush 70%
Calls to technical support 80
Required:
Calculate the profitability of the Chester Company account.