Walk a Customer Profitability Decision
Use ABC thinking to decide whether to reprice, redesign, or retain a high-revenue customer.
The fork A top-line “strategic” account buys $2.1 million a year but consumes custom reporting, weekend support, and three implementation specialists. The wrong first move turns accounting into argument. Activity-Based Costing Activity-based costing works because many overhead costs do not move with a single broad volume measure. Traditional allocations often spread shared cost by revenue, labor hours, or units, which can make simple products Frame the decision, trace the driver, recommend the action. Frame Step 1 The account looks attractive on revenue alone. What is the strongest finance move at step 1? Trace Step 2 Activity data shows cost-to-serve is…
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