Complete Question: Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps the banks to ________.
A) reduce the rate of customer defection
B) make low-profit customers more profitable
C) enhance the growth potential for each customer through cross-selling
D) increase the longevity of the customer relationship
E) focus disproportionate effort on high-value customers
Answer:
B) make low-profit customers more profitable
Explanation:
Many banks and phone companies now charge fees for once-free services to ensure minimum customer revenue levels. This helps the banks to make low profit customers more profitable.
The basic logic behind this strategy is that when customers find something coming free, then they start taking it for granted, they don't pay much attention to it, therefore, when the some services are free, customers will not be spending much on them, like upgrading, monthly plan up-gradations, monthly or annual subscriptions. Consequently, to turn the those customers into highly valuable customers, companies charge for the services which were free of cost in the past.
Buy what u need when u need it not what u want when u want my dad always said
Explanation:
The adjusting entry is as follows
Insurance expense A/c Dr $4,800
To Prepaid insurance A/c $4,800
(Being the insurance expense is recorded)
The computation is shown below:
= Beginning balance + debited amount - unexpired insurance amount
= $6,600 + $2,300 - $4,100
= $4,800
So while preparing the adjusting entry, we debited the insurance expense account and credited the prepaid insurance account
The price at which equilibrium is reached is known as the equilibrium price. In economics, the equilibrium price is reached when the quantity of a certain product will match the demand of a certain product with regard to price per product. In order to solve for this, you have to compute for quantity demand and quantity supply. After that, you have to graph the line of these two equations and find where these two lines would intersect to find the equilibrium price.
Answer:
a. $9,338
b. 0.363
Explanation:
a. Contribution Margin = Sales - Variable Cost
Where Sales = $25,700
Variable Cost = Food & Packaging + Payroll + 40% x General, Selling and Administrative expenses
V.C. = 8,982 + 6,500 + 40% * 3,700
V.C = 8,982 + 6,500 + 1,480
= $16,362
Therefore, Contribution Margin = Sales - Variable Cost
= $25,700 - $16,362
=$9,338
b. McDonald's contribution margin ratio = Contribution Margin / Sales
= $9,338 / $25,700
= 0.363
