The accounting firm of Hardin and Mayes is examining its client base to determin

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.

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