Question

Macaron Products has determined the following costs:

Order processing (per order)		$	6
Additional handling costs if order marked rush (per order)		$	10
Customer service calls (per call)		$	12
Relationship management costs (per customer per year)		$	4,100

In addition to these costs, product costs amount to 84 percent of sales. In the prior year, Macaron had the following experience with one of its customers, Johnson Brands:

Sales		$54,600
Number of orders		230
Percent of orders marked rush		70%
Calls to customer service		164

Calculate the profitability of the Johnson Brands account. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Profit / (Loss) of the Johnson Brands account

Answer 1

Profitability of jhonson brand
Particulars			Amount	Amount
Sale				$ 54,600.00
less:
Cost of goods sold (54600*84%)			$ 45,864.00
Order processing (230*6)			$   1,380.00
Rush handling (230*70%*10)			$   1,610.00
Customer service (164*12)			$   1,968.00
Relationship management cost			$   4,100.00	$ 54,922.00
profit/loss of jhonson brands a/c				$     -322.00