You are the manager of Roxy Music and are a member of a management team set up to assess the profitability of the customer accounts. We are going to use an album which goes Platinum that is 100,000 units nationwide. It goes platinum in a period of 10 weeks. The wholesale sales price per CD is $14 dollars. The product cost is 60% of this. Roxy Music also has to pay Australian Performing Rights Association (APRA) (for the musicians) at 3.5% of gross. Orders are undertaken only by phone. A log has shown that the medium and large clients take 5 minutes, while small clients take 45 minutes. This is due to them discussing all the problems they are having with their small businesses. Telephone sales personnel are paid for 40 hours a week and earn $30,000 per annum. Packing and shipping an order takes 15 minutes for a 1,000 unit box but it takes 2 hours when it needs to be repackaged into smaller containers and then couriered. Warehouse staff earn on average $12.50 per hour. Administrative salaries are $30,000 also. REQUIREMENTS 1.Before the next management meeting, you are to calculate the profitability of a representative customer fromeach group. And make strategic recommendations that the controller can take to the CEO.
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