Sales and Customer Service Costs

Contribution Margin: The contribution margin dropped 3.8% and is an unfavorable variance because, while total sales dropped 3.1% the extra increase in other areas of variable spending caused the contribution margin to drop further than total sales dropped. Contribution margin is the amount of each unit

The company is profitable. However, management has become concerned about the profitability of the customers in its three customer-size categories—large, medium and small. Different customers demand different levels of support. Management has no basis for identifying customers that generate high profits or to drop those that do not generate enough revenues to cover the expenses to support them. Under the previous accounting system, it wasn't possible to determine the costs of supporting individual customers.

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.

* Under cost plus system, rates are negotiated between the manufacturer and the customer, and the distributor manages those contracted rates (and adds % to the cost)

How would you go about setting a fee for a particular service? Give details for two services.

Using the given information in the question John Deere will use prices in each markets are as follows:

When adding a customer, add the customer's balance times the sales rep's commission rate to the commission for the corresponding sales rep.

A key measuring in comparing these companies’ stock values and assessing the functioning results is the operating margin figure. Whereas Best Buy’s operating margin of 0.02% is not as good as Wal-Mart’s 0.06% nor as bleak as Amazon’s 0.01%, it is by no means close to Apple’s 0.31% (Yahoo! Inc., 2013). The following table includes the operating margin

Net sales: $1,000,000 cost of goods sold: $700,000 rent: $20,000 wages: $100,000 other operating expenses: $50,000 net sales – all operating expenses = 530,000

There was an increase in operating margin from 4.92 to 7.77 in 2016 and is mainly attributable to the decline in operating expenditures leading to a higher EBIT in 2016.

(a) Total direct costs for the business divided by the total number of units produced.

• Current 2Q17 reported revenue consensus is $2,976 (Previous mean $2,975; range $2,886 - $3,079)

- Customers of the custom division, which develops products for a single customer. This division has a small amount of customers but a lot of products.

Revenues. Total revenues from taxes and other sources of income projected in the first year of business total $1 million and are expected to double to $2 million within the next four years.

There are two types of retailers in e-commerce market; one type is pure network retailers (i.e., Dotcoms) which emerged as internet develops and have no traditional stores and sell products through network while the other type is multi-channel retailers which sell products through both internet and traditional stores. Due to differences of two retailers’ marketing channels, the two retail stores have their own advantage. This article contributes to discussing different retailers’ pricing issues in B2C market, and then further analyzes price dispersion in e-commerce market brought by retailers’ different sale methods.