SkinTan’s top five customers generate sales revenue of $950,000 per annum. Each generates a different gross margin as a consequence of price negotiations that have been carried out over several years. Because of their location, each customer incurs different distribution expenses. Sales commissions are paid at the rate of 6% on all sales. Fixed costs are customer specific, covering salaries of sales and office staff who service each customer. The following table shows the information for each of the top customers for the previous year.
Gross margin %
Carry out a customer profitability analysis and make recommendations in relation to any future strategies SkinTan should take in relation to its top customers.