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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) $ $ $ 360,000 After Dropping Service 210,000 50,000 17,800 34,500 20,000 70,000 402,300 $ (42,300) 0

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) $ $ $ 360,000 After Dropping Service 210,000 50,000 17,800 34,500 20,000 70,000 402,300 $ (42,300) 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vishu

Subject: accounting 

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) $ $ $ 360,000 After Dropping Service 210,000 50,000 17,800 34,500 20,000 70,000 402,300 $ (42,300) 0
Transcribed Image Text: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) $ $ $ 360,000 After Dropping Service 210,000 50,000 17,800 34,500 20,000 70,000 402,300 $ (42,300) 0
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 $57,500 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 10 percent of the equipment leases, labor, and other costs. She also expects to save 12 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?
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 $57,500 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 10 percent of the equipment leases, labor, and other costs. She also expects to save 12 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?
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