pippi, the manager of quik mart, deposits the store's receipts in its account at regional bank. as to the receipts, the relation
1 answer:
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Answer:
Customer Lifetime Value
Explanation:
Customer Lifetime Value is a measure of how much amount of money a customer spends on your business/products/services over the course of his whole lifetime.
It is a predictor of how well you are doing to retain your existing customers.
Why is it important?
suppose you spend $10 to advertise your product (belt) and a customer buys 5 belts on average every year for 15 years. You get $12 profit for each belt sold.
$
Subtract the advertising cost
$ This is your customer lifetime value
Now imagine what would have happen if we had to sell these belts to 75 different customers?
The advertising cost to attract 75 customers would have been too much and hence net profit and customer lifetime value would be very less.
$
$
This is why customer lifetime value is important and businesses focus on retaining their customers for longer periods.
Answer:
The current BEP is 727 units
with the proposed change it will be 875 units
The change increase the break even point by 148 units
Explanation:
The BEP in units will be:
Where:
40 - 18 = 22 contribution margin
then we calcualte BEP
16,000 / 22 = 727,27 units
<u>with the proposed change:</u>
40 - 16 = 24 contribution margin
16,000 + 5,000 = 21,000 fixed cost
21,000 / 24 = 875
875 - 727 = 148