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Fill out the missing data for question 3 2 , ( c ) . 32. 32. Customer Decision. The following customer segmented annual income statement
Fill out the missing data for question c
32. 32. Customer Decision. The following customer segmented annual income statement is for Owens Accounting Services, Inc.: Sales Revenue Variable Costs Contribution Margin Direct Fixed Costs Allocated Fixed Costs Profit (Loss) Cherry Corp $300,000 90,000 120,000 $90,000 Customers Orange lnc $390,000 120,000 120,000 $150,000 Apple LLP $750,000 540,000 $210,000 195,000 60,000 $ (45,000) Total $3,750,000 $900,000 405,000 300,000 $195,000 Management is concerned about the losses associated with the Apple LLP account and would like to drop this customer. Allocated fixed costs are assigned to customers based on sales revenue. If Apple LLP is dropped, total allocated fixed costs are assigned to the remaining customers, and all variable and direct fixed costs for the Apple LLP account will be eliminated. Required: a. b. c. Perform differential analysis using the format presented in Table 7.12, Table 7.13, and Table 7.14. Assume keeping all customers is Alternative 1 , and dropping the Apple LLP account is Alternative 2. Which alternative is best? Explain. Summarize the result of dropping the Apple LLP account using the format presented in Table 7.15. Customer Decision (continued) c. Amounts shown in parentheses indicate a negative impact on profit, and amounts without parentheses indicate a positive impact on profit: Result of Dropping Apple LLP Account Sales revenue lost ($750,000) Description Correct Incorrect Incorrect Incorrect Incorrect Dollar Amount Correct Incorrect Incorrect Incorrect Incorrect
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