Kendall & Floyd provides landscaping services in Eastvale. Sara Kendall, the owner, is concerned about the recent losses the company has incurred and is considering dropping its yard cleanup services, which she feels are marginal to the company's business. She estimates that doing so will result in lost revenues of $60,400 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 yard cleanup business, Sara estimates that the company will save 12 percent of the equipment leases, labor, and other costs. She also expects to save 27 percent on rent and utilities. The income statement before dropping the yard cleanup service follows. Required: a. Prepare a report of the differential costs and revenues if the yard cleanup service is discontinued. b. Should Sara discontinue the yard cleanup service? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a report of the differential costs and revenues if the yard cleanup service is discontinued. Note: Enter loss amount with minus sign. Kendall & Floyd Annual Income Statement Before Dropping After Dropping Service Service Sales revenue $ 402,000 $ 362,400 Costs Equipment leases 275,000 242,000 Labor 37,800 33,264 Utilities 21,000 15,330 Rent 25,500 18,615 Other costs 17,500 15,400 Manager's salary 65,000 Total costs $ 441,800 $ 324,609 Operating profit (loss) $ (39,800) $ (238,859)