Customer profitability analysis: manufacturer Feather Light manufactures optic cables for the telecommunications industry. The cost management staffs have just completed a customer profitability analysis, at the request of the marketing manager. The following information forms the basis for the analysis:
Customer-driven activities Cost driver Cost driver rate
Cost driver data for two of Feather Light’s major customers for the most recent year:
Customer-driven activities Caesar Stream Nero Com
The following data relates to those same two customers:
Caeser Stream Nero Com
1. Prepare a customer profitability analysis for CaesarStream and NeroCom.
2. Prepare a customer profitability graph, similar to the one in Exhibit 1514, for the two customers.
3. Comment on the relative profitability of the two customers.
4. Construct an Excel• spreadsheet to solve requirement 1. Show hoe the solution will change if CaesarStream’s sales revenue is $125 000 and NeroCom’s cost of goods sold is $77 500.