As companies shift from a product-centric focus to a customer-centric focus, a myth that almost all current customers are profitable needs to be replaced with the truth. Some high-demanding customers may indeed be unprofitable! Here’s the basic problem. With accounting’s traditional product gross profit margin reporting, managers can’t see the more important and relevant “bottom half” of the total income statement picture–all the profit margin layers that exist and should be reported from customer-related MSDA expenses. Based on your new knowledge on measuring customer profitability, what other considerations should a company look at when measuring customer profitability?

You can access the Santam Group website and also have a look at their subsidiaries or business units like MiWy Insurance, Santam RE, Santam Personal, Santam Specialists, Santam Commercial

Question

A company pursuing a differentiation strategy strives to create a product or service that customers perceive as being different in some important way. Customers need to believe that the product or service offered has differentiated qualities that are worth paying a premium price for.

Provide practical strategic recommendations for how the Santam Group can better differentiate their products and services for each of the following strategic business units (SBUs): Santam Personal, Santam Commercial, Santam Specialist, MiWay and Santam Re.

Calculate and graph the profit maximizing price and quantity in output markets (monopoly)

ACME Electricity provides electricity service in a rural community as a monopolist with no competitors.

The following Table 1 shows price per unit and total costs associated with various amounts of electricity (in 100 kilowatts blocks) in the short-run:

Table 1:

Step 1

Using the information in Table 1, create a separate table that includes calculations of the following for each quantity of electricity (in 100 kilowatt blocks): Total Revenue, Marginal Revenue, Total Cost, Marginal Cost, Average Total Cost, and Profit.

The table can be computer-generated or created by hand. Be sure to appropriately label the table so the various costs, revenues, and profit can be identified. Round off to two decimal places for the dollar values.

Step 2

Using Table 1 and the table you created in Step 1 for this section, create one graph that contains the following curves: Marginal Revenue, Demand, Average Revenue, Marginal Cost, and Average Total Cost.

Label the vertical axis “Price, Revenue, and Cost (in dollars)” and the horizontal axis “Quantity of Electricity (in 100 kilowatt blocks)”. Label each of the five curves on the graph. The graph can be computer-generated or created by hand. Indicate the profit maximizing quantity and price in this graph. Indicate the amount of profit earned by the company at the profit maximizing quantity by shading the relevant area on the graph.

1.A monopolist maximizes profit at the output rate where its total revenue equals total cost.

True

False

2. To maximize profit, the perfectly competitive firm charges a price equal to __________ while the monopolist charges a price __________.

marginal revenue; equal to marginal cost

marginal cost; greater than marginal cost

marginal revenue; less than marginal revenue

average total cost; greater than average total cost

3.Compared to the perfectly competitive firm, the monopolist faces a demand curve that is ___________________ elastic because there are ______________ substitutes for the product produced by the monopolist.

less; fewer

less; more

more; fewer

more; more

E4.3 (LO 2, 3) (Income Statement Items) Presented below are certain account balances of Paczki Products Co.

Instructions

From the foregoing, compute the following: (a) total net revenue, (b) net income, and (c) income attributable to controlling stockholders.

Explain why it is important to understand the accounting and reporting requirements for an area that an auditor will be assigned to audit – use sales and collections as an example. Briefly explain FASB’s revenue recognition standard.

2. Explain the basic processes involved in generating and document revenue transactions; and in collecting for revenue transactions. You can use an example to help you explain the process. As part of your explanation, also state which documents are used to detail the revenue and collections transactions in these processes.

3. Describe the steps auditors use to test controls. Within each testing step, describe the key issues and concepts. Give an example or examples to help you explain these steps.

1)

At the profit-maximizing level of output, for both a pure monopolist and a purely competitive firm, which of the following is true:

2)

Which of the following is not an example of why markets may not provide efficient outcomes:

3)

Using the following data, perform a oneway analysis of variance using α=.05. Write
up the results in APA format.
[Group1: 51, 45, 33, 45, 67]
[Group2: 23, 43, 23, 43, 45]
[Group3: 56, 76, 74, 87, 56]

For the following reaction Kc = 2.20 ✕ 102 at 74°C. CO(g) + Cl2(g) ↔ COCl2(g) Find the equilibrium concentrations of all chemical species starting with [CO] = 0.105 M and [Cl2] = 0.105 M.

[CO] = M

[Cl2] = M

[COCl2] = M

For the following reaction K_c = 2.20 ✕ 10² at 74°C.

CO(g) + Cl₂(g) ↔ COCl₂(g)

Find the equilibrium concentrations of all chemical species starting with [CO] = 0.179 M and [Cl₂] = 0.287 M.
[CO] = M
[Cl₂] = M
[COCl₂] = M