Question: is considering dropping a customer (Brandon Inc.) from its customer list because of losses with contracts with Brandon Inc. After review, the last years information

is considering dropping a customer (Brandon Inc.) from its customer list because of losses with contracts with Brandon Inc. After review, the last years information related to Brandons contract shows the following: Sales (1,000 units) $200,000; Direct materials $100,000; Direct labor ($20 per labor hour) $40,000; and Manufacturing Overhead (80% variable and the remaining is non-avoidable cost) $70,000. Dropping Brandon Inc. as a customer will have the following effect on the operating income of Najah Industries:

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