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.