4 Problem 1-43 (Algo) Cost Data for Managerial Purposes (LO 1-3) 25 points eBook Print 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 lawn services, which she feels are marginal to the company's business. She estimates that doing so will result in lost revenues of $64,500 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 lawn business, Kate estimates that the company will save 16 percent of the equipment leases, labor, and other costs. She also expects to save 26 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 References Sales revenue Before Dropping Service After Dropping Service $ 330,000 Costs Equipment leases 230,000 Labor 25,000 Utilities 18,700 Rent 28,200 Other costs 19,000 Manager's Salary 71,000 Total costs 391,900 Operating profit (loss) $ (61,900) b. Should Kate discontinue the lawn service? Yes No