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The following annual income statement is for Tatum \& Associates, a firm that provides legal services to its customers. Tatum \& Associates is concerned about the losses associated with the Elko Corporation account and is considering dropping this customer. Allocated fixed costs are assigned to customers based on sales. For example, $105,000 in allocated fixed costs is assigned to Elko based on this customer's sales as a percent of total sales [$105,000=$300,000($1,050,000 $3,000,000)]. If a customer is dropped, total allocated fixed costs are assigned to the remaining customers. All variable costs and direct fixed costs are differential costs. 1. Using the differential analysis, determine whether Tatum \& Associates would be better off dropping the Elko Corporation account or keeping the account. Explain your conclusion. 2. Summarize the result of dropping the Elko Corporation account using the differential analysis. The following annual income statement is for Tatum \& Associates, a firm that provides legal services to its customers. Tatum \& Associates is concerned about the losses associated with the Elko Corporation account and is considering dropping this customer. Allocated fixed costs are assigned to customers based on sales. For example, $105,000 in allocated fixed costs is assigned to Elko based on this customer's sales as a percent of total sales [$105,000=$300,000($1,050,000 $3,000,000)]. If a customer is dropped, total allocated fixed costs are assigned to the remaining customers. All variable costs and direct fixed costs are differential costs. 1. Using the differential analysis, determine whether Tatum \& Associates would be better off dropping the Elko Corporation account or keeping the account. Explain your conclusion. 2. Summarize the result of dropping the Elko Corporation account using the differential analysis

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