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Service Pro provides two kinds of services. During the most recent accounting period, the two service lines produced the following operating results: Service revenue $

Service Pro provides two kinds of services. During the most recent accounting period, the two service lines produced the following operating results:


Service revenue

$ 110,000

$ 40,000

Unit-level materials

$ (26,000)

$ (8,000)

Unit-level labor

$ (36,000)

$ (20,000)

Product-level selling & administrative costs

$ (16,000)

$ (9,500)

Company wide facility-level costs

$ (4,000)

$ (4,000)

Net income

$ 28,000

$(1,500)

If the company stops providing Service 2:



The company's income will increase by $3,500 per year.


The company's income will decrease by $3,500 per year.


The company's income will increase by $2,500 per year.


The company's income will decrease by $2,500 per year.

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