Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 14 - Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis - Assignment Material - Questions - Page 578: 14-4

Answer

It's not as simple as dropping customers to improve profitability. Customer-profitability analysis should help identify areas for improvement, but the decision to drop a customer should consider various factors, including the long-term impact on the business, strategic objectives, and the potential to retain or replace the customer's revenue with more profitable accounts.

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