The Montana Consulting is evaluating the profitability of their two clients, X and Y. Total fixed costs are allocated evenly between customer X and Y, and will remain the same whether they add or drop clients. Should The Montana Consulting drop client Y? The profit/loss for each customer is shown below. Should client Y be dropped?

X Y

Revenue 500,000 190,000

Variable costs 227,500 146,500

Contribution margin 272,500 43,500

Allocated fixed costs 95,000 95,000

Customer profit (loss) 177,500 (51,500)