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 $67,800 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 14 percent of the equipment leases, labor, and other costs. She also expects to save 29 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. Sales revenue Costs Equipment leases Labor Utilities Rent Other costs Manager's salary Kendall & Floyd Annual Income Statement Before Dropping Service $ 395,000 Total costs iting profit (ler) $ 290,000 30,000 15,500 21,500 16,800 60,000 433,800 (28 900) After Dropping Service
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 $67,800 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 14 percent of the equipment leases, labor, and other costs. She also expects to save 29 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. Sales revenue Costs Equipment leases Labor Utilities Rent Other costs Manager's salary Kendall & Floyd Annual Income Statement Before Dropping Service $ 395,000 Total costs iting profit (ler) $ 290,000 30,000 15,500 21,500 16,800 60,000 433,800 (28 900) After Dropping Service
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text: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 $67,800 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 14 percent of the equipment leases, labor, and other costs. She also
expects to save 29 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.
Sales revenue
Costs
Kendall & Floyd
Annual Income Statement
Before Dropping
Service
Equipment leases
Labor
Utilities
Rent
Other costs
Manager's salary
Total costs
Operating profit (loss)
$
$
$
395,000
290,000
30,000
15,500
21,500
16,800
60,000
433,800
(38,800)
After Dropping
Service
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education