Accounting Services, Inc. has two customers. Customer $x$ generates $$600,000$ in income after

direct fixed costs are deducted, and Customer Z generates $$580,000$ in income after direct

fixed costs are deducted. Allocated fixed costs total $$1,000,000$ and are assigned $40$ percent

to Customer $x$ and $60$ percent to Customer Z$.$ Total allocated fixed costs remain the same

regardless of how these costs are assigned to customers.

Based on this information, which of the following best describes the course of action

preferred by management regarding this customer decision?

Drop Customer Z because this customer generates a net loss.

Drop Customer Z because this customer generates less income after direct fixed costs than Customer

X$.$

Keep Customer Z because eliminating this company would have the effect of increasing company

profit by $$580,000.$

Keep Customer Z because eliminating this company would have the effect of decreasing company

profit by $$580,000.$

None of the answer choices is correct.