The accounting firm of Hardin and Mayes is examining its client base to determin
ID: 2461294 • Letter: T
Question
The accounting firm of Hardin and Mayes is examining its client base to determine how profitable its regular clients are. Its analysis indicates that Aces, Inc. paid $58,000 in fees last year, but cost the firm $62,000 ($53,000 in billable labor, supplies, and copying, and $9,000 in allocated common fixed costs). If Hardin and Mayes dropped Aces, Inc. as a client, how would profit be affected?
A) $0
B) Increase $4,000
C) Decrease $5,000
D) Decrease $58,000
A) $0
B) Increase $4,000
C) Decrease $5,000
D) Decrease $58,000
Explanation / Answer
B . increase 4000.