Jack Johnson, the owner of Johnson Beverage, has just attained a notice that one of his greatest and most faithful customers may wish to have to negotiate a lower cost for its product purchases. Advice compiled by Johnson’s cpa, where customer service costs are allocated to customers as a percent of revenue, indicates that profit margin on the customer is too low to withstand a price decrease. Students are requested to design an activity-based system for allocating customer service prices and to use it to estimate customer profitability for several customers.
Johnson Beverage, Inc. Case Study SolutionThe revised costs represent the customer is sufficiently profitable to allow Johnson Beverage to negotiate on price to sustain the company and places low demands on customer service resources. Added investigation identifies some unprofitable customers, formerly regarded as lucrative, that offer opportunities for strategic decisions that lead to profit development.
PUBLICATION DATE: February 03, 2009 PRODUCT #: UV1033-PDF-ENG
This is just an excerpt. This case is about ORGANIZATIONAL DEVELOPMENT
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