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Which of the following costs should be included in customer profitability analysis?Product costsDistributionCustomer servicingFinished goods inspection costs

Question

Which of the following costs should be included in customer profitability analysis?

  • Product costs
  • Distribution
  • Customer servicing
  • Finished goods inspection costs
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Solution

  1. Product Costs: These should be included in a customer profitability analysis. This is because the cost of producing the goods or services that a company sells to its customers directly impacts the profitability of each customer.

  2. Distribution Costs: These costs should also be included in the analysis. Distribution costs refer to the costs associated with delivering the product or service to the customer. These can include transportation, warehousing, and packaging costs.

  3. Customer Servicing: This is another cost that should be included in the analysis. Customer servicing can include costs related to customer support, such as call centers, technical support, and any other post-sale service that the company provides to its customers.

  4. Finished Goods Inspection Costs: These costs should also be included in a customer profitability analysis. These costs are associated with ensuring that the finished product meets the company's quality standards before it is sold to the customer. If a company has high inspection costs, it may be less profitable to sell to customers who require a high level of quality assurance.

In conclusion, all of these costs - product costs, distribution costs, customer servicing, and finished goods inspection costs - should be included in a customer profitability analysis. This is because they all directly impact the cost of serving each customer and, therefore, the profitability of each customer.

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