ServicePro provides two kinds of services. During the most recent accounting period, the two service...
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Accounting
ServicePro provides two kinds of services. During the most recent accounting period, the two service lines produced the following operating results:
|
| Service 1 | Service 2 | ||||
| Service revenue | $ | 100,000 |
| $ | 35,000 |
|
| Unit-level materials | $ | (24,000 | ) | $ | (6,000 | ) |
| Unit-level labor | $ | (34,000 | ) | $ | (18,000 | ) |
| Product-level selling & administrative costs | $ | (14,000 | ) | $ | (7,500 | ) |
| Company wide facility-level costs | $ | (9,000 | ) | $ | (9,000 | ) |
|
| ||||||
| Net income | $ | 19,000 |
| $ | (5,500 | ) |
|
| ||||||
If the company stops providing Service 2:
a. The company's income will increase by $4,500 per year.
b. The company's income will decrease by $4,500 per year.
c. The company's income will increase by $3,500 per year.
d. The company's income will decrease by $3,500 per year.
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