' ' . Styles 10 Find QUESTION A & S company supplies furniture to three local retailers, Quebec, Penner, and Triplesix Inc. The following exhibit presents representative revenues and costs of A&S by customers for the year 2019. Additional information on A & S's costs for different activities at various levels of the cost hierarchy is as follows: Quebec $450,000 270,000 37,000 Penner $340,000 220,000 20,000 Triplesix $540,000 430,000 49,000 Total $1,330,000 $920,000 $106,000 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 10,000 16,000 12,000 13,000 20,000 378,000 $72,000 6,000 8,000 9,000 7,000 12,000 282,000 $58,000 9,000 14,000 11,000 12,000 16,000 541,000 -$1,000 $25,000 $38,000 $32,000 $32,000 $48,000 $1,201,000 $129,000 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. A & S 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. sales LUUU $129,000 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. A&S 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. A&S 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 A & S company considers dropping the Triplesix Inc. as a custom because of COVID-19? 2. Please calculate the operating income(loss) if A & S drop Triplesix Inc. as a custom. 3. Should A & S keep Triplesix as a customer or just drop it? Why? MacBook Air