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: Hansen Penner Yorkville Total Sales 5750,000 $360,000 $340,000 $1,450,000 Cost of goods sold 470,000 260,000 230,000 $960,000 Materials-handling labour 47.000 22.000 48,000 S117.000 Materials-handling equipment (Cost written off as amortization) 11.000 6.000 10.000 $27.000 Rent 16,000 8.000 19.000 $43.000 Marketing support 12,000 9.000 11.000 532.000 Purchase orders and delivery processing 13,000 7.000 12.000 $32.000 General administration 20,000 12.000 16.000 S48.000 Total operating costs 589,000 324.000 346,000 $1.299.000 Operating income S161,000 $36.000 56,000 5191.000 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 income(loss) if Test drop Yorkville Inc. as a custom. 3. Should Test keep Yorkville as a customer or just drop it? Why