How would net marketing contribution change if the customer retention changed to 75%? FIGURE 1-8 CUSTOMER RETENTION AND PROFITABILITY70% Customer RetentionSales and Profit PerformanceRetainedCustomersLostCustomersNewCustomersOverallPerformanceSales (millions)70,00030,00030,000100,000Revenue per Customer$1,000$300$500$940.0Sales (millions)$70.0$9.0$15.0$94.0Percent Margin45%35%30%42%Gross Profit (millions)$31.5$3.2$4.5$39.2Marketing & Sales Expenses per Customer$100.00$50.00$500.00$180.77Marketing & Sales Expenses (millions)$7.0$1.5$15.0$23.5Net Marketing Contribution (millions)$24.5$1.7-$10.5$15.7Other Expenses (millions)$10.0Profit Before Tax$5.7Pre-Tax Return on Sales6.0%RetainedCustomersOverall80% Customer RetentionSales and Profit PerformanceLostCustomersNewCustomers PerformanceNumber of Customers80,00020,00020,000100,000Revenue per Customer$1,000$300$500$960.0Sales (millions)$80.0$6.0$10.0$96.0Percent Margin45%35%30%43%Gross Profit (millions)$36.0$2.1$3.0$41.1Marketing & Sales Expenses per Customer$110.00$55.00$500.00$165.83Marketing & Sales Expenses (millions)$8.8$1.1$10.0$19.9Net Marketing Contribution (millions)$27.2$1.0-$7.0$21.2Other Expenses (millions)$10.0Profit Before Tax$11.2Pre-Tax Return on Sales11.7%

Net marketing contribution at 70% = $15.7 millions Net marketing contribution at 80% = $21.2…

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Business

Accounting

How would net marketing contribution change if the customer retention changed to 75%?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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