Final answer:
To analyze customer profitability, one should compute the servicing cost as a percentage of the customer's gross margin, compare it with norms, and examine the trend over the years.
Step-by-step explanation:
An appropriate way to analyze customer profitability is by computing the cost of servicing a customer as a percentage of the customer's gross margin. This approach becomes more insightful when compared against company or industry norms, and when examined over several years to identify trends and patterns. Therefore, the most comprehensive method is to include all these factors in the analysis.
Understanding the breakdown of total costs into fixed costs, marginal costs, average total costs, and average variable costs provides a firm with crucial insights and aids in the assessment of customer profitability. These costs offer different perspectives that are essential for making informed business decisions.
The use of these measures on a per-unit basis, reflected in cost curves, can help to further elucidate the financial dynamics at play.
As such, the response 'E. Choices "A," "B," and "C"' encompasses the most thorough analysis of customer profitability.