Use the following information to answer Exercises below:
Eastern Entertainment Co. (EE) manufactures arcade game machines, and provides servicing for these machines for up to 2 years after the sale. Management at EE wants to evaluate the relative profitability of their customers: some customer request extensive servicing, and management is concerned about potentially losing money over the long term because of the servicing contracts. The cost accounting team has put together the following estimates regarding specific cost activities related to servicing the game machines:
There are 3 particular customers that EE is concerned about, based on the level of service required. Each of the three customers produced gross profits of $1,500 this year. Management has accumulated the following data in relation to these customers:

-Assuming that there are no fixed costs involved, if the least profitable customer were dropped, what would be the change in EE's Net Income?

Question

Use the following information to answer Exercises below: 
Eastern Entertainment Co. (EE) manufactures arcade game machines, and provides servicing for these machines for up to 2 years after the sale. Management at EE wants to evaluate the relative profitability of their customers: some customer request extensive servicing, and management is concerned about potentially losing money over the long term because of the servicing contracts. The cost accounting team has put together the following estimates regarding specific cost activities related to servicing the game machines:
  There are 3 particular customers that EE is concerned about, based on the level of service required. Each of the three customers produced gross profits of $1,500 this year. Management has accumulated the following data in relation to these customers:
 
-Assuming that there are no fixed costs involved, if the least profitable customer were dropped, what would be the change in EE's Net Income?

Quizplus · Accepted Answer

The Answer of Use the following information to answer Exercises below: 
Eastern Entertainment Co. (EE) manufactures arcade game machines, and provides servicing for these machines for up to 2 years after the sale. Management at EE wants to evaluate the relative profitability of their customers: some customer request extensive servicing, and management is concerned about potentially losing money over the long term because of the servicing contracts. The cost accounting team has put together the following estimates regarding specific cost activities related to servicing the game machines:
  There are 3 particular customers that EE is concerned about, based on the level of service required. Each of the three customers produced gross profits of $1,500 this year. Management has accumulated the following data in relation to these customers:
 
-Assuming that there are no fixed costs involved, if the least profitable customer were dropped, what would be the change in EE's Net Income?

Use the Following Information to Answer Exercises Below