Question

SkiBlu, Ltd., divides its customers into Gold customers and Silver customers. The company has one full-time customer representative per 1,000 Gold customers and one full-time customer representative per 10,000 Silver customers. Customer representatives receive salaries plus bonuses of 10 percent of customer gross margin. SkiBlu spends 80 percent of its promotion costs on Gold customers to encourage their loyalty.

Customer Costs	Total			Gold			Silver
Number of customers		110,000			40,000			70,000
Average customer representative salary				$	80,000		$	80,000
Promotion costs	$	4,900,000
Average gross margin per customer				$	710		$	310

  

Required:

a. Calculate the totals of the items below for both gold and silver customers, as well as the excess of gross margin over customer costs for each category. (Do not round intermediate calculations.)

gold silver

total gross margin

customer representative salaries and bonuses

promotion costs

excess of gross margin over customer cost

Answer 1

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