Johnson Beverage Inc

750 Words3 Pages
Robert KennedyCollege

|Financial Management |
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|Number of the assignment: Final Assessment |
|Name of the assignment: Johnson Beverage Inc |
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|Date: November 26th ,
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JBI distributes principally bottled sports drinks provided by small specialty beverage companies. The company’s discounts policy depends on customers and is based on a number of commercial factors.

One of JBI’s best and most loyal customers for years, Saver Superstore, had been approached by a competitor and may want to negotiate a lower price for its product purchases.

During a meeting held to address the situation Johnson’s accountant Jim Thomas presented a compiled report on customers profitability and profit margin where customer service costs are allocated to customers as a percentage of revenue. This analysis brought Johnson to the conclusion that Saver Superstore is not a very profitable customer compared to other client retailers ,that it is one of their lowest-margin customers and he can’t consider lowering prices for them.

The operation manager for JBI suggested considering that Saver Superstore is an easy to deal with partner unlike some other customers that make the business spent a lot of time on their rush orders .This comment brought Johnson to wonder about the customer service costs structure and allocation system. The current system allocates these costs based the revenue generated by each customer which assign a large share to Saver Superstore the biggest one.

JBI’s accountant Thomas suggested collecting information about the time and the amount of activity devoted to customer which might help the company

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