Managerial Accounting

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Lemon Inc.: Discontinue Residential Lawn Service, Impact Profits

MGRACT-3USFRP

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?