ping the computers 32. Customer Decision. The following customer segmented annual income statement is for Owens Accounting Services, Inc.: Sales revenue Variable costs Contribution margin Direct fixed costs Allocated fixed costs Profit (loss) Cherry Corp $ 500,000 400,000 $100,000 30,000 40,000 $ 30,000 Customers Orange, Inc. $500,000 370,000 $130,000 40,000 40,000 $ 50,000 Apple, LLP $250,000 180,000 $ 70,000 65,000 20,000 $(15,000) Total $1,250,000 950,000 $ 300,000 135,000 100,000 $ 65,000 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 Table 7.12, Table 7.13, and Table 7.14. 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 Table 7.15. d. Explain why the loss shown for the Apple LLP account in the segmented income state- ment might be misleading to management.

32. Customer Decision. The followng cultomer sogmented annual incorne staternent is for Owere Acocinting Senices, ha: Maragement is concerned about the losses associated with the Apple LLP account and would the to drop this customer. Alocated fixed costs are assigned to customers based on sales revenue. If Apple LiP is dropped, total allocated fixed costs are assigned to the remaining customers, and all variable and direct fixed costs for the Apple LLP account wil. be oliminated. Required: a. Perform differential anaysis using the format presented in Table 7.12, Table 7.13, and Table 7.14. Assume keeping all customers is Alternative 1, and dropping the Apple LLP account is Alternative 2. b. Which alternathe is best? Explain c. Summarize the result of dropping the Apple LL.P account using the format presented in Table 7.15. d. Explain why the loss shown for the Apple L.LP account in the segmented income statement might be misloading to managernent