ServicePro provides two kinds of services. During the most recent accounting period, the two service lines produced the following operating results: If the company stops providing Service 2:

Question

Quizplus · Accepted Answer

If Service 2 is stopped, the company will lose the revenue of $25,000, but it will also save $23,500 in direct expenses. Therefore, the net effect on the company's income will be a decrease of $1,500 per year ($25,000 - $23,500).

ServicePro Provides Two Kinds of Services