Product line Lakeland Financial Services provides outsourcing services for three areas: payroll, general ledger (GL), and tax compliance. The company is currently contemplating the elimination of the GL area because it is showing a pre-tax loss. An annual income statement follows.

Lakeland Financial Services
Income Statement by Service Line
For the Year Ended July 31
(in thousands)
	Payroll	GL	Tax	Total
Sales	$5,280	$3,840	$4,320	$13,440
Cost of sales	(3,360)	(2,400)	(2,592)	(8,352)
Gross margin	$1,920	$1,440	$1,728	$5,088
Avoidable fixed and variable costs	$1,512	$1,764	$1,248	$4,524
Allocated fixed costs	216	168	252	636
Total fixed costs	$1,728	$1,932	$1,500	$5,160
Operating profit	$192	$(492)	$228	$(72)

If the GL area were dropped, how would the companys pre-tax profit be affected? Note: Do not use a negative sign with your answer. Dropping the segment would result in an Answerincremental gain ofIncremental loss of

$Answer

Feedback

Partially correct

Marks for this submission: 1.11/2.21.

PreviousSave AnswersFinish attempt ...