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Problem 1-43 (Algo) Cost Data for Managerial Purposes (LO 1-3) KC Services provides landscaping services in Edison, Kate Chen, the owner, is concerned about the recent losses the company has incurred and is considering dropping its lown services, which she feels are marginal to the company's business. She estimates that doing so will result in lost revenues of $46,500 per year (including the lost tree business from customers who use the company for both services). The present manager will continue to supervise the tree services with no reduction in salary. Without the town business, Kate estimates that the company will save 13 percent of the equipment leases, labor, and other costs. She also expects to save 17 percent on rent and utilities. Required: a. Prepare a report of the differential costs and revenues if the lawn service is discontinued. (Enter loss amount with minus sign.) KC SERVICES Annual income Statement Before Dropping Service $ 302,000 After Dropping Service Sales revenue Costs Equipment leases Labor Utilities Rent Other costs Manager's Salary Total costs Operating profit (los) 168,000 29,000 15,600 29,000 16,500 70.000 328,100 (26,100) $ $ b. Should Kate discontinue the lawn service? Yes O No Proy 1 of 4 !!! Next >