One of my favorite movie of all time 
Bateman feel so empty with his life that he has to fantasize about killing or insulting people. There's a good scene at the start of the movie. Bateman goes in a pub and the waitress tell him that they don't accept CC
give her monies and she turn around and he just violently insult her. She turn back to him and he's just smiling and she ignore him. Like nothing happened. Because nothing did happens. He never insulted her.
At this point he still can make the difference between reality and his fantasies. But by the end he's so deep into them he just can't anymore. He did not kill Allen. He made it all up in his head. ''Allen'' is leaving for london and he hate the guy so much he decide to make up the stories about him killing him violently before he leave. To make his fantasies seem more real.
let's be honest. We all had at some point violent though about someone. I think this movie is just that, but to a guy who simply lost deeper into that. He feel so trapped into the shallow lifestyle he has to find a way to get out of it and it by killing everyone and everything that make his life miserable. Yet all happens inside his head.