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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:  Service 1  Service 2  Service revenue $80,000$20,000 Unit-level materials ($20,000) ($2,000)  Unit-level labor ($30,000) ($14,000)  Product-level selling & administrative costs ($10,000) ($2,500)  Company wide facility-level costs ($5,000) ($5,000)  Net income $15,000($3,500) \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:

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Definitions:

Return On Assets

A financial ratio indicating the profitability of a company relative to its total assets, measuring efficiency in generating earnings.

Ratio Form

A mathematical expression that represents the relationship between two numbers or variables as a fraction.

Average Total Assets

A financial metric that represents the average value of all a company's assets over a specified period.

Return On Assets

This ratio indicates how efficiently a company uses its assets to generate profit, calculated as net income divided by total assets.

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