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)
|
$8.50 |
| |
|
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.