Managerial Accounting

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Lemon Inc.: Discontinue Residential Lawn Service, Impact Profits


Lemon Inc. intends to discontinue the residential lawn service. The sales and costs for the residential lawn customers are shown below.

Residential Lawn Service
Sales \$90,000
Variable costs \$72,000
Fixed costs \$11,000

What will be the change to Lemon Inc.'s profits if the residential lawn service is eliminated, assuming that 30% of the fixed costs are unavoidable?