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Kresge Lodging has an elite program for its card members. There are three levels, based on total nights stayed: Diamond (50 nights or more); Platinum (25 nights or more); and Base (fewer than 25 nights). In order to facilitate reservations and answer customer questions, Kresge Lodging provides access to special customer service representatives, who work exclusively with the designated level (Diamond, and so on). Customer representatives receive salaries plus bonuses of 5 percent of customer gross margin. The company provides various perquisites (free nights, upgrades, and so on) to its members, with 75 percent of the cost of the perquisites used for the benefit of Diamond members, 20 percent for Platinum members, and 5 percent for Base members. Diamond Customer Costa Number of members Average customer representative salary Number of representatives 21,300 $80,500 15 Perquisite costs Average annual gross margin per customer $ 1,200 The gross margin received by Kresge is the amount received from the participating hotels for a customer's stay. Total 161,000 28 Required: a. What is the excess of gross margin over customer costs for each category of customer? b. Which customers are more profitable? Total gross margin Customer representative salaries Customer representative bonuses Perquisite costs Net profit $ 7,000,000 Complete this question by entering your answers in the tabs below. Diamond Required A Required B What is the excess of gross margin over customer costs for each category of customer? Platinum Platinum $5,500 $ 53,300 8 Base Base 84,200 $ 42,200 5 $ 400 $200

Kresge Lodging has an elite program for its card members. There are three levels, based on total nights stayed: Diamond (50 nights or more); Platinum (25 nights or more); and Base (fewer than 25 nights). In order to facilitate reservations and answer customer questions, Kresge Lodging provides access to special customer service representatives, who work exclusively with the designated level (Diamond, and so on). Customer representatives receive salaries plus bonuses of 5 percent of customer gross margin. The company provides various perquisites (free nights, upgrades, and so on) to its members, with 75 percent of the cost of the perquisites used for the benefit of Diamond members, 20 percent for Platinum members, and 5 percent for Base members. Diamond Customer Costa Number of members Average customer representative salary Number of representatives 21,300 $80,500 15 Perquisite costs Average annual gross margin per customer $ 1,200 The gross margin received by Kresge is the amount received from the participating hotels for a customer's stay. Total 161,000 28 Required: a. What is the excess of gross margin over customer costs for each category of customer? b. Which customers are more profitable? Total gross margin Customer representative salaries Customer representative bonuses Perquisite costs Net profit $ 7,000,000 Complete this question by entering your answers in the tabs below. Diamond Required A Required B What is the excess of gross margin over customer costs for each category of customer? Platinum Platinum $5,500 $ 53,300 8 Base Base 84,200 $ 42,200 5 $ 400 $200

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kresge Lodging has an elite program for its card members. There are three levels, based on total nights stayed: Diamond (50 nights or more); Platinum (25 nights or more); and Base (fewer than 25 nights). In order to facilitate reservations and answer customer questions, Kresge Lodging provides access to special customer service representatives, who work exclusively with the designated level (Diamond, and so on). Customer representatives receive salaries plus bonuses of 5 percent of customer gross margin. The company provides various perquisites (free nights, upgrades, and so on) to its members, with 75 percent of the cost of the perquisites used for the benefit of Diamond members, 20 percent for Platinum members, and 5 percent for Base members. Customer Costa Number of members Average customer representative salary Number of representatives Total 161,000 Required A 28 $ 7,000,000 Required: a. What is the excess of gross margin over customer costs for each category of customer? b. Which customers are more profitable? Required B Diamond 21,300 $80,500 15 $1,200 Perquisite costs Average annual gross margin per customer The gross margin received by Kresge is the amount received from the participating hotels for a customer's stay. Complete this question by entering your answers in the tabs below. Total gross margin Customer representative salaries Customer representative bonuses Perquisite costs Net profit What is the excess of gross margin over customer costs for each category of customer? Diamond Platinum Platinum $5,500 $ 53,300 8 Base Bane 84,200 $ 42,200 5 $ 200 $ 400
Transcribed Image Text:Kresge Lodging has an elite program for its card members. There are three levels, based on total nights stayed: Diamond (50 nights or more); Platinum (25 nights or more); and Base (fewer than 25 nights). In order to facilitate reservations and answer customer questions, Kresge Lodging provides access to special customer service representatives, who work exclusively with the designated level (Diamond, and so on). Customer representatives receive salaries plus bonuses of 5 percent of customer gross margin. The company provides various perquisites (free nights, upgrades, and so on) to its members, with 75 percent of the cost of the perquisites used for the benefit of Diamond members, 20 percent for Platinum members, and 5 percent for Base members. Customer Costa Number of members Average customer representative salary Number of representatives Total 161,000 Required A 28 $ 7,000,000 Required: a. What is the excess of gross margin over customer costs for each category of customer? b. Which customers are more profitable? Required B Diamond 21,300 $80,500 15 $1,200 Perquisite costs Average annual gross margin per customer The gross margin received by Kresge is the amount received from the participating hotels for a customer's stay. Complete this question by entering your answers in the tabs below. Total gross margin Customer representative salaries Customer representative bonuses Perquisite costs Net profit What is the excess of gross margin over customer costs for each category of customer? Diamond Platinum Platinum $5,500 $ 53,300 8 Base Bane 84,200 $ 42,200 5 $ 200 $ 400
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