In addition to evaluating its operations by office as shown earlier, EBC also wishes to evaluate the performance of its two lines of business. Solid Waste and Water/ Wastewater (Water WW). EBC management has prepared the following line of business income statement:

EBC accountants have provided the following analysis of the cost of services, all of which are considered traceable:

Required 

1. Prepare a line of business contribution margin statement for EBC (similar to Exhibit 24-11) that extends the line of business operating results through line of business contribution to common expenses.

2. Comment on the operating results for each line of business. What should EBC management do with regard to the Water/WW business based on these results?

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ENVIRONMENTAL BUSINESS CONSULTANTS, LLC Line of Business Statement For the Year Ended December 31, 2019 Solid Waste Water/WW Gross sales... $3,676,000 $470,000 Less reimbursable costs.. (366,350) (64,650) Net sales..... $3,309,650 $405,350 Cost of services. (2,256,787) (390,713) Gross profit on sales... $1,052,863 $ 14,637 Operating expenses. Operating income. Interest revenue Income before tax. Firm Total $ 4,146,000 (431,000) $ 3,715,000 (2,647,500) $ 1,067,500 (556,500) $ 511,000 7,500 518,500