ServicePro Provides Two Kinds of Services If the Company Stops Providing Service 2:
A) the Company's

question 104

Multiple Choice

ServicePro provides two kinds of services.During the most recent accounting period,the two service lines produced the following operating results: $$\begin{array} { | l | r | r | } \hline & \text { Service 1 } & \text { Service 2 } \\\hline \text { Service revenue } & \$ 80,000 & \$ 20,000 \\\hline \text { Unit-level materials } & ( \$ 20,000 ) & ( \$ 2,000 ) \\\hline \text { Unit-level labor } & ( \$ 30,000 ) & ( \$ 14,000 ) \\\hline \text { Product-level selling \& administrative costs } & ( \$ 10,000 ) & ( \$ 2,500 ) \\\hline \text { Company wide facility-level costs } & ( \$ 5,000 ) & ( \$ 5,000 ) \\\hline \text { Net income } & \$ 15,000 & ( \$ 3,500 ) \\\hline & & \\\hline\end{array}$$ If the company stops providing Service 2:

• A) The company's income will decrease by $1,500 per year.
• B) The company's income will increase by $1,500 per year.
• C) The company's income will decrease by $3,500 per year.
• D) The company's income will increase by $3,500 per year.

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