A computer manufacturer currently has a 15 percent customer defection rate. Their accounting department estimates the incremental contribution to profit and overhead as 30 percent. Customers purchase computers every four years at an average cost of $1,200 . In an effort to reduce the defection rate, the company is improving both the quality of its computers and its post-sale service. Determine
the value of a loyal customer if the defection rate drops to 5 percent.
a. Less than or equal to $500
b. More than $500 and less than or equal to $1,000
c. More than $1,000 and less than or equal to $1,500
d. More than $1,500 and less than or equal to $2,000
D
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