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Exam 6: Measuring and Managing Customer Relationships

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Question 21

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High cost to serve customers:

A) have high order quantities.
B) have large amounts of post sales support.
C) order standard products.
D) have little to no pre-sales support.

E) A) and D)
F) B) and D)

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Question 22

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Low cost to serve customers:

A) have low order quantities.
B) have large amounts of post sales support.
C) order standard products.
D) have customized delivery.

E) B) and C)
F) None of the above

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Question 23

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What are the four options that manufacturing and service companies have to transform breakeven or loss customers into profitable ones?

The 80/20 rules states that the top 20% of customers generate 80% of revenues.

MSDA expenses as a percentage of sales is an effective way to measure customer profitability.

Customer loyalty is characterized by a customer's attitude toward a product or company.

Brent Company's cost system assigns MSDA expenses to customers using a rate of 33% of sales revenue.The new CFO has discovered that Brent's customers differ greatly in their ordering patterns and interaction with Brent's sales force.Because the CFO believes Brent's cost system does not accurately assign MSDA expenses to customers,he developed an ABC system and gathered the following information. Required: (a)Using the current cost system's approach of assigning MSDA expenses to customers using a rate of 33% of sales revenue,determine the operating profit associated with Austin and with Brooke. (b)Using the activity-based costing information provided,determine the operating profit associated with Austin and with Brooke. (c)Which of the two methods produces more accurate assignments of MSDA expenses to customers? Explain.

Many costs of marketing,selling,and distribution expenses are incurred not to support individual products or product lines,but rather to support customers,market segments or distribution channels.

The 80/20 rule:

Customers are price sensitive with few special demands are:

Customer profitability:

Compare the 80-20 rule and the whale curve as it relates to customer profitability.

Discuss the issues related to excessive focus on nonfinancial customer metrics such as customer loyalty and satisfaction.

Which of the following is NOT part of the pricing waterfall chart?

Discounts given to encourage large purchases are known as sales discounts.

Customers that require a low price and lots of customized service are:

The whale curve shows:

Marketing,selling,distribution,and administrative expenses are dependent on the volume and mix of products that the company produces.

Persuading customers to use a greater score of the company's products and services is an example of:

Omega Company has the following two customers: If the company pays a 2% sales commission based on revenue,this will encourage a salespersons' efforts to sell to: