The Accounting Firm of Pie and Lowell Is Examining Its

Multiple Choice

The accounting firm of Pie and Lowell is examining its client base to determine how profitable its regular clients are.Its analysis indicates that Chico,Inc.paid $116,000 in fees last year,but cost the firm $124,000 ($106,000 in billable labor,supplies,and copying,and $18,000 in allocated common fixed costs) .If Pie and Lowell dropped Chico,Inc.as a client,and all fixed costs are unavoidable,how would profit be affected?

A) $0
B) Increase $8,000
C) Decrease $10,000
D) Decrease $116,000