Question
Tatum & Associates is concerned about the losses associated with the Elko Corporation account and is considering dropping this customer. Allocated fixed costs are assigned
Tatum & Associates is concerned about the losses associated with the Elko Corporation account and is considering dropping this customer. Allocated fixed costs are assigned to customers based on sales. If a customer is dropped, total allocated fixed costs are assigned to the remaining customers. All variable costs and direct fixed costs are differential costs. Elko: sales $10,534, vairable costs $7,989, direct fixed costs $2,523, allocated fixed costs $1,098 New Haven: sales $12,397, vairable costs $7,180, direct fixed costs $2,493, allocated fixed costs $1,263 Penryn Inc: sales $12000, vairable costs $7000, direct fixed costs $2000, allocated fixed costs $1200 Using the differential analysis determine the increase/decrease in profit if Tatum drops the Elko account versus keeps all the accounts. Answer to nearest whole dollar without any commas or decimal points eg. 1000 not 1,000.00 Enter a negative number as -10 not (10). Indicate an increase as a positive number and a decrease as a negative number.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started