Quebec Inc supplies furniture to three local retailers, OKeefe, Ville, and Pier Inc The following exhibit presents representative revenues and costs of Quebec inc by customers for the year 2019 Additional information on Quebec inc s costs for different activities at various levels of the cost hierarchy is as follows Mogul Penner Slicer Total Sales $660,000 $630,000 $440,000 $1,730,000 Cost of goods sold 480,000 420,000 380,000 $1,280,000 Materials handling labour 41,000 18,000 33,000 $92,000 Materials handling equipment (Cost written off as amortization) 10,000 6,000 8,000 $24,000 Rent 18,000 12,000 18,000 $48,000 Marketing support 11,000 9,000 10,000 $30,000 Purchase orders and delivery processing 13,000 7,000 12,000 $32,000 General administration 20,000 12,000 16,000 $48,000 Total operating costs 593,000 484,000 477,000 $1,554,000 Operating income $67,000 $146,000 $37,000 $176,000 Materials handing labour costs vary with the number of units of furniture shipped to customers 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 Quebec Inc 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 Marketing costs vary with the number of sales visits made to customers Purchase order costs vary with the number of purchase orders received delivery processing costs vary with the number of shipments made Quebec allocates fixed general administration costs to customers on the basis of dollar sales made to each customer Required What are the relevant costs and relevant revenues when Quebec Inc considers dropping the Pier Inc as a custom because of COVID 19 Please calculate the operating income(loss) if Quebec drop Pier Inc as a custom Should Quebec inc keep Pier as a customer or just drop it Why

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Quebec Inc. supplies furniture to three local retailers, OKeefe, Ville, and Pier Inc. The following exhibit presents representative revenues and costs of Quebec inc. by

Quebec Inc. supplies furniture to three local retailers, OKeefe, Ville, and Pier Inc. The following exhibit presents representative revenues and costs of Quebec inc. by customers for the year 2019. Additional information on Quebec inc.s costs for different activities at various levels of the cost hierarchy is as follows:

	Mogul	Penner	Slicer	Total
Sales	$660,000	$630,000	$440,000	$1,730,000
Cost of goods sold	480,000	420,000	380,000	$1,280,000
Materials-handling labour	41,000	18,000	33,000	$92,000
Materials-handling equipment (Cost written off as amortization)	10,000	6,000	8,000	$24,000
Rent	18,000	12,000	18,000	$48,000
Marketing support	11,000	9,000	10,000	$30,000
Purchase orders and delivery processing	13,000	7,000	12,000	$32,000
General administration	20,000	12,000	16,000	$48,000
Total operating costs	593,000	484,000	477,000	$1,554,000
Operating income	$67,000	$146,000	-$37,000	$176,000

Materials-handing labour costs vary with the number of units of furniture shipped to customers.

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.

Quebec Inc. 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.