Question
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 $ 130,000 $ 54,000 Unit-level materials $ (30,000 ) $ (12,000 ) Unit-level labor $ (40,000 ) $ (24,000 ) Product-level selling & administrative costs $ (20,000 ) $ (13,500 ) Company wide facility-level costs $ (8,000 ) $ (8,000 ) Net income $ 32,000 $ (3,500 ) If the company stops providing Service 2: The company's income will decrease by $4,500 per year. The company's income will increase by $5,500 per year. The company's income will increase by $4,500 per year. The company's income will decrease by $5,500 per year.
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