Cloud Mobility, a provider of cell phone service, has a toll-free customer service

| September 8, 2016

Question
Question 1: Customer Profitability Analysis (5 marks)

Cloud Mobility, a provider of cell phone service, has a toll-free customer service line that is available to all of their customers. They are concerned that this free service is having a negative impact on profits.

How might customer profitability analysis help management assess whether this is the case?

Question 2: Mitigation of Risk in a Project (5 marks)

Joe’s Cookies is planning to install a new automated assembly line to prepare, cook, and package their very popular line of chocolate chip cookies. Joe’s is concerned about the project going over cost—Ace Manufacturing, the company that is designing, constructing, and installing the new equipment, is a fairly new company with an unproven track record. Joe’s has chosen Ace to manufacture their assembly line as Ace has promised a more automated process than their competitor with a good warranty program. Describe ways that Joe’s can mitigate the risk of going over budget.

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