Layout References Review View Help Open in Desktop App Tell me what you want to do -ody) V 16 V ' ' B I U ON A A Ev Ev, Question 4: Test company supplies furniture to three local retailers, Hanson, Penner, and Yorkville Inc. The following exhibit presents representative revenues and costs of Test by customers for the year 2019. Additional information on Test's costs for different activities at various levels of the cost hierarchy is as follows: Hanson $750,000 470,000 47,000 Penner $360,000 260,000 22,000 Yorkville $340,000 230,000 48,000 Total $1,450,000 $960,000 $117,000 Sales Cost of goods sold Materials handling labour Materials-handling equipment (Cost written off as amortization) Rent Marketing support Purchase orders and delivery processing General administration Total operating costs Operating income 11,000 16,000 12,000 13,000 20,000 589.000 $161,000 6,000 8,000 9,000 7,000 12,000 324,000 $36,000 10,000 19,000 11,000 12,000 16,000 346,000 -$6,000 $27,000 $43,000 $32,000 $32,000 $48,000 $1,259,000 $191,000 slichtlich 1. Materials-handing labour costs vary with the number of units of furniture shipped to customers. 2. Different areas of the warehouse stock furniture for different customers. Materials-handling equipment in an area and amortization costs on the equipment are identified with individual customer accounts. Any equipment not used remains idle. The equipment has a one-year useful life and zero disposal price. 3. Test allocates rent to each customer account on the basis of the amount of warehouse space occupied by the products to be shipped to that customer. 4. Marketing costs vary with the number of sales visits made to customers. 5. Purchase order costs vary with the number of purchase orders received; delivery processing costs vary with the number of shipments made. 6. Test allocates fixed general administration costs to customers on the basis of dollar sales made to each customer Required: 1. What are the relevant costs and relevant revenues when Test company considers dropping the Yorkville Inc. as a custom because of COVID-19? 2. Please calculate the operating incomelloss) if Test drop Yorkville Inc. as a custom. 3. Should Test keep Yorkville as a customer or just drop it? Why