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Customer Profitability Analysis Leahy Inc. has 10 customers that account for all of its $1.472.000 of net income. Its activity-based costing system is able to
Customer Profitability Analysis Leahy Inc. has 10 customers that account for all of its $1.472.000 of net income. Its activity-based costing system is able to assign all costs, except for $200,000 of general administrative costs, to key activities incurred in connection with serving its customers. A customer profitability analysis based on activity costing produced the following customer profits and losses: Customer #1 2 3 04 15 #6 N7 68 29 #10 $ 000 262,000 (75,000) 240,000 50,000 375,000 (100,000) 325.000 225.000 (180,000) $1,472,000 Total LO 19-27. Customer Profitability Analysis Refer to the previous exercise E19-26 for Leahy Inc. Required a. If Leahy were to notify customers 3. 7, and 10 that it will no longer be able to provide them services in the future, will that increase company profits by S355,000? Why or why not? b. What is the primary benefit of preparing a customer profitability analysis
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