Lighthouse Company divides its customers into Premium customers and Standard cus

Question

Lighthouse Company divides its customers into Premium customers and Standard customers. The company has one full-time customer representative per 100 Premium customer and one full-time customer representative per 1,000 Standard customers. Customer representative receive salaries plus bonuses of 1 percent of customer gross margin. lighthouse spends 80 percent of its promotion costs on Premium customers to encourage their loyality. What is the excess of gross margin over customer costs for each category of customer?

Explanation / Answer

total premium standard # cutomers 11000 3000 8000 average Custoemr rep salary 80000 80000 promotion costs 1700000 avg gross margin per customer 1600 220 # cutomer representatives 30 80 customer costs: customer representative salary 2400000 6400000 bonuses @1% of gross margin 48000 17600 promotion costs 1360000 340000 total customer costs 3808000 6757600 cost per customer 1269 845 excess of gross margin over 331 -625      customer cost (per customer)

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