Norvell wants to discontinue full service the

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Reference no: EM13579135

This one is stalling me. If you are able to help me with the answer, can you please explain how to figure it?

Norvell Lawn Care offers three lawn care services to its clients. The revenues and costs associated with each service follow:

	Full Service	Complete Service	Minimum Service
Revenues	$ 60,000	$ 72,000	$48,000
Cost of Sales	42,000	43,200	25,000
Product Margin	18,000	28,800	23,000
Facility-sustaining costs	20,000	20,000	20,000
Profit	(2,000)	8,800	3,000

Norvell wants to discontinue Full Service. The facility-sustaining costs are related to depreciation on the equipment and insurance and are allocated equally across all product lines. Cost of sales includes wages, gasoline, and lawn chemicals consumed. Should Norvell drop Full Service? Why?

Reference no: EM13579135

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