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ServicePro provides two kinds of services. During the most recent accounting period, the two service lines produced the following operating results: Service 1 Service 2

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

Service 1

Service 2

Service revenue

$

100,000

$

35,000

Unit-level materials

$

(24,000

)

$

(6,000

)

Unit-level labor

$

(34,000

)

$

(18,000

)

Product-level selling & administrative costs

$

(14,000

)

$

(7,500

)

Company wide facility-level costs

$

(9,000

)

$

(9,000

)

Net income

$

19,000

$

(5,500

)

If the company stops providing Service 2:

a. The company's income will increase by $4,500 per year.

b. The company's income will decrease by $4,500 per year.

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

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

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