Question
The following information is available in regard to revenues from Sweet Inc., a customer of the electronics division of Multi Trading Inc. Revenues $1,000,000 Cost
The following information is available in regard to revenues from Sweet Inc., a customer of the electronics division of Multi Trading Inc. Revenues $1,000,000 Cost of goods sold 500,000 Goods-handling labor 50,000 Goods-handling equipment - depreciation 175,000 Rent 125,000 Marketing support 50,000 Sales-order and delivery processing 25,000 General administration 125,000 Allocated corporate-office costs 10,000 1,060,000` Operating loss ($ 60,000) Cost of goods sold, goods-handling labor, marketing support, sales-order, and delivery-processing costs can be saved if the account is withdrawn. There is no alternate use for warehouse space and goods-handling equipment. Should Multi Trading Inc. continue selling to Sweet Inc.?
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No, as dropping Sweet Inc. account will lead to an increase in overall operating income of $60,000.
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Yes, as dropping Sweet Inc. account will lead to a reduction in overall operating income by $375,000.
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Yes, as dropping Sweet Inc. account will lead to a reduction in overall operating income by $760,000.
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Yes, as dropping Sweet Inc. account will lead to a reduction in overall operating income by $365,000.
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