* 46% 1:33 PM a webassign.net 1 Verizon? b) using the allocated costs from (a),
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* 46% 1:33 PM a webassign.net 1 Verizon? b) using the allocated costs from (a), compute the profit margin for product A and product B. If you get a negative number, enter it with a minus sign, i.e., enter negative $100 as -100, not ($100) profit margin for A-$ profit margin for B Question 2 (evaluating customer profitability) You own a credit card company. You want to evaluate the profitability of two representative customers, A and B. The numbers for customers A and B are as follows Your revenues and costs for customers are as follows: " Revenues: The only source of revenue is the interest you charge on credit card balances. You charge customers an interest rate of 20% (20% APR). So, if the credit card balance is $100, your revenue is $100 0.2-$20. Costs: based on the estimates from your ABC system, each transaction costs you $0.5, and each customer-support call costs you $4. Ignore all other costs. Required a) compute the revenue you get from each customer, and the costs of serving each customer. b) compute the profit margin for each customer. If you get a negative number, enter it with a minus sign, i.e., enter negative $200 as 200 not ($200) profit margin for A-$ profit margin for B-$ Home My Assignments Extiension RequeshExplanation / Answer
1-
customer A
customer B
revenue
A = (1500*20%) B = (600*20%)
300
120
less cost of transactions
A = (150*.5) B = (60*.5)
75
30
less cost of customer calls
A=(60*4) B = (3*4)
240
12
2-
customer A
customer B
revenue
300
120
less cost of transactions
75
30
less cost of customer calls
240
12
profit margin
-15
78
1-
customer A
customer B
revenue
A = (1500*20%) B = (600*20%)
300
120
less cost of transactions
A = (150*.5) B = (60*.5)
75
30
less cost of customer calls
A=(60*4) B = (3*4)
240
12
2-
customer A
customer B
revenue
300
120
less cost of transactions
75
30
less cost of customer calls
240
12
profit margin
-15
78
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