The Accounting Firm of Pie and Lowell Is Examining Its

question 32

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

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Definitions:

Extrapolation

To predict corresponding variables outside of the domain.

Regression Line

In statistics, a line that best fits a set of data points, reflecting the relationship between an independent variable and a dependent variable.

Correlation

An association between two variables.

Scatterplot

A type of graph in statistics used to display values for typically two variables for a set of data.