Question Details

Dropping an unprofitable customer will 




1.	A common finding in many studies is that a high percentage of operating income is 
	a.	contributed by a small number of customers.
	b.	contributed to evenly by most customers.
	c.	the result of high discounting.
	d.	the result of cooperative efforts by many low-volume customers.

		

2.	Loss-causing customers
	a.	should be eliminated.
	b.	should be evaluated for ways to become profitable customers.
	c.	should be retained because each customer adds to long-run profitability.
	d.	do not exist because additional customer sales always increase profits.

		

3.	Customers are more valuable when they are all EXCEPT
	a.	well known in the community.
	b.	expected to continue to do business with a company.
	c.	in an industry with high-growth potential.
	d.	require special attention on a regular basis.

		

4.	Dropping an unprofitable customer will 
	a.	eliminate long-run costs assigned to that customer.
	b.	eliminate most short-run costs assigned to that customer.
	c.	decrease long-run profitability.
	d.	increase the potential to cross-sell other products that are more desirable.

		

5.	More insight into the static-budget variance can be gained by subdividing it into 
	a.	the sales-mix variance and the sales-quantity variance.
	b.	the market-share variance and the market-size variance.
	c.	the flexible-budget variance and the sales-volume variance.
	d.	a cost hierarchy.




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