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14-31 (30 min.) Customer profitability, customer cost hierarchy.

1.(All amounts in thousands of U.S. dollars)

WholesaleRetail

North AmericaSouth America Big SamWorld

Wholesaler  Wholesaler    Stereo  Market

Revenues at list prices$400,000$600,000$130,000$100,000

Discount    30,000 50,0007,000       0

Revenues (at actual prices)  370,000  550,000  123,000  100,000

Cost of goods sold  325,000  490,000  112,000    92,000

Gross margin    45,000    60,000    11,000      8,000

Customer-level operating costs

Product handling      5,000      6,000         800         900

Order processing8001,000   200         130

Delivery:

Regular300   450   150     80

Expedited120   200     10       5

Sales visit480   550   240   165

  Total cust.-level optg.costs      6,700      8,200      1,400      1,280

Customer-level operating

income$  38,300$  51,800$    9,600$    6,720

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