Customer profitability analysis. Wee One's, a diaper service, has two clients.

Madison Children's Hospital and Little Bits Day Care Centers. The following is inthousands).

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This analysis shows that Madison Children's Hospital is not profitable for Wee One's. Use differential analysis to ascertain whether Wee One's should discontinue the hospital account.

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Madison Hospital Little Bits Total $105 $185 $290 Revenues (fees charged) Operating costs Cost of services (variable). $106 $153 $259 Salaries, rent, and general administration (fixed) 12 13 25 Total operating costs $118 $166 $284 Operating profits $ (13) $ 19 $ 6