Question

Delta Products has determined the following costs:

Order Processing/Order	$5.00
Additional handling cost per rush order	$8.50
Customer Service Calls/Call	$10.00
Relationship Management Costs/Customer	$2,000

In addition to these costs, product costs amount to 90% of sales. In the prior year, Delta Products had the following experience with Johnson Brands:

Sales	$53,800
Number of Orders	200
Percent of Orders marked Rush	60%
Calls to Customer Service	140

Calculate the profitability of the Johnson Brands account.

Answer 1

Sales	$53,800.00
Less:
Order Processing= Cost*No. of orders	$1,000.00
Additional handling cost = Number of orders*%marked rush * Additional cost	$1,020.00
Customer Service Calls = Cost per call*No. of calls	$1,400.00
Relationship Management Costs	$2,000.00
Net Profit	$48,380.00

WORKINGS