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Question: A tax consultant wonders whether he should be more selective about the class of clients he serves so as to maximize his income. He usually deals with four categories of clients: the very rich, rich, upper middle class, and middle class. He has information on each and every client served, the taxes paid by them, and how much he has charged them. Since many factors relating to the clients vary (number of dependents, business deductibles, etc.), irrespective of the category they belong to, he would like an appropriate analysis to be done to see which among the four categories of clientele he should choose to serve in the future.
- What kind of analysis should be done in the above case and why?
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Quiltworks company reported actual sales of $2,000,000, and fixed costs of $450,000. The contribution margin ratio is 30%.
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