(Ethics) Many manufacturers are deciding to service only wholesalers or re¬ tailers that buy $10,000 or more of products from the manufacturers annu¬ ally. Manufacturers defend such policies by stating that they can provide better service to customers that handle more volume and more diverse product lines.

a. Relate the concepts in the chapter to the decision of manufacturers to drop small customers.

b. Are there any ethical implications of eliminating groups of customers that could be less profitable than others?

c. Does activity-based costing adequately account for all costs that are re¬ lated to a decision to eliminate a particular customer base? {Hint: Con¬ sider opportunity costs such as those related to reputation.)

LO1.