customer decision the following customer segmented annual income statement is for ma 1571348

Customer Decision. The following customer segmented annual income statement is for Management Consulting, Inc.

Management is concerned about the losses associated with the Apple LLP account and would like to drop this customer. Allocated fixed costs are assigned to customers based on sales revenue. If Apple LLP is dropped, total allocated fixed costs are assigned to the remaining customers, and all variable and direct fixed costs for the Apple LLP account will be eliminated.

Required:

a. Perform differential analysis using the format presented in . Assume keeping all customers is Alternative 1, and dropping the Apple LLP account is Alternative 2.

b. Which alternative is best? Explain.

c. Summarize the result of dropping the Apple LLP account using the format presented in .

d. Explain why the loss shown for the Apple LLP account in the segmented income statement might be misleading to management.