Jay Ltd wants to drop one of their service lines since it is showing a loss. The following details are provided for cleaning services. Revenue $80 000 Less: Cost of cleaning products used 30 000 Gross profit $50 000 Less: Operating expenses 62 300 Wages of cleaning staff 35 000 Other items used for cleaning 3 000 Depreciation building used for storage(allocated) 2 000 Manager’s salary (allocated) 13 000 Depreciation of cleaning equipment 7 000 Electricity(allocated) 2 300 Loss on cleaning services $(12 300) The following operating expenses are irrelevant to the decision to drop the service. Wages of cleaning staff; manager’s salary and electricity Depreciation of building used for storage; manager’s salary and electricity Depreciation of building used for storage; other items for cleaning and electricity Depreciation of cleaning equipment; manager’s salary and electricity
Jay Ltd wants to drop one of their service lines since it is showing a loss. The following details are provided for cleaning services.
Revenue $80 000
Less: Cost of cleaning products used 30 000
Gross profit $50 000
Less: Operating expenses 62 300
Wages of cleaning staff 35 000
Other items used for cleaning 3 000
Manager’s salary (allocated) 13 000
Depreciation of cleaning equipment 7 000
Electricity(allocated) 2 300
Loss on cleaning services $(12 300)
The following operating expenses are irrelevant to the decision to drop the service.
- Wages of cleaning staff; manager’s salary and electricity
- Depreciation of building used for storage; manager’s salary and electricity
- Depreciation of building used for storage; other items for cleaning and electricity
- Depreciation of cleaning equipment; manager’s salary and electricity
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