ACCOUNTING 222 - Customer
Profitability Analysis Exam Question &
Answers 2025
Customer Profitability Analysis; Determines the profitability of
particular customers or groups - CORRECT ANSWERS ✔✔Customer
profitability analysis measures the amount of profit that a customer
generates. It can be calculated by looking at the revenue that the
customer generates and subtracting the costs associated with servicing
the customer relationship. The costs that are calculated should include
marketing costs, cost of production, packaging, logistics and more.
CPA; Why differences exist in the operating income earned from
customers - CORRECT ANSWERS ✔✔- Uses ABC
- Leads to Strategic Decision making
- Instead of costing a product or department we look at the customers
and what they generate in terms of profit and what they costs in terms
of factory time etc.
CPA - IMPORTANCE
Ideally we are looking Customer profitability analysis to seek and
understand how much a certain customer brings in as revenue and if its
a lot - management need to ensure that the customer is well looked
after. - CORRECT ANSWERS ✔✔It is important to measure
customer profitability because it has been seen that the top 20% of the
profitable customers tend to bring in between 150% to 300% of the
total profits. Customer profitability analysis can be done at an
, ACCOUNTING 222 - Customer
Profitability Analysis Exam Question &
Answers 2025
individual level, at a segment level and at an aggregate business level
depending on the specific objective at hand.
Reasons for Importance; Managers use this information to ensure that
customers making large contributions to the operating income of a
company receive a high level of attention from the company and that
loss-making customers do not use more resources than the revenues
they provide.
A good example of this is in the Hotel Industry; where, typically,
managers use customer-profitability analysis to segment customers
into profitable customers who stay frequently at the hotel and are
given many perks and other customers who are much less profitable
are given less service because they are not providing the revenue for
the Hotel to waste its time on peasants - CORRECT ANSWERS
✔✔Segmenting customers from highly profitable to not profitable
can help in creating more targeted marketing activities. This means that
a marketer can actually spread the marketing dollars in proportion to
the segments from where the larger profits are coming in from.
Marketers can also choose to use differential pricing in order to ensure
that those customers who are not profitable at break even.
Customer Profitability Analysis; - CORRECT ANSWERS
✔✔Customers are not all equal; They may differ on their issue of
activities or may demand more services - i.e. use the example of getting
Profitability Analysis Exam Question &
Answers 2025
Customer Profitability Analysis; Determines the profitability of
particular customers or groups - CORRECT ANSWERS ✔✔Customer
profitability analysis measures the amount of profit that a customer
generates. It can be calculated by looking at the revenue that the
customer generates and subtracting the costs associated with servicing
the customer relationship. The costs that are calculated should include
marketing costs, cost of production, packaging, logistics and more.
CPA; Why differences exist in the operating income earned from
customers - CORRECT ANSWERS ✔✔- Uses ABC
- Leads to Strategic Decision making
- Instead of costing a product or department we look at the customers
and what they generate in terms of profit and what they costs in terms
of factory time etc.
CPA - IMPORTANCE
Ideally we are looking Customer profitability analysis to seek and
understand how much a certain customer brings in as revenue and if its
a lot - management need to ensure that the customer is well looked
after. - CORRECT ANSWERS ✔✔It is important to measure
customer profitability because it has been seen that the top 20% of the
profitable customers tend to bring in between 150% to 300% of the
total profits. Customer profitability analysis can be done at an
, ACCOUNTING 222 - Customer
Profitability Analysis Exam Question &
Answers 2025
individual level, at a segment level and at an aggregate business level
depending on the specific objective at hand.
Reasons for Importance; Managers use this information to ensure that
customers making large contributions to the operating income of a
company receive a high level of attention from the company and that
loss-making customers do not use more resources than the revenues
they provide.
A good example of this is in the Hotel Industry; where, typically,
managers use customer-profitability analysis to segment customers
into profitable customers who stay frequently at the hotel and are
given many perks and other customers who are much less profitable
are given less service because they are not providing the revenue for
the Hotel to waste its time on peasants - CORRECT ANSWERS
✔✔Segmenting customers from highly profitable to not profitable
can help in creating more targeted marketing activities. This means that
a marketer can actually spread the marketing dollars in proportion to
the segments from where the larger profits are coming in from.
Marketers can also choose to use differential pricing in order to ensure
that those customers who are not profitable at break even.
Customer Profitability Analysis; - CORRECT ANSWERS
✔✔Customers are not all equal; They may differ on their issue of
activities or may demand more services - i.e. use the example of getting
