Jay Ltd wants to drop one of their service lines since it is showing a loss. The following details are provided for cleaning services.   Revenue                                                                                            $80 000 Less: Cost of cleaning products used                                                      30 000 Gross profit                                                                                        $50 000   Less: Operating expenses                                                              62 300               Wages of cleaning staff                                         35 000    Other items used for cleaning                                       3 000             Depreciation building used for storage(allocated)      2 000             Manager’s salary (allocated)                                            13 000             Depreciation of cleaning equipment                             7 000             Electricity(allocated)                                                          2 300   Loss on cleaning services                                                              $(12 300)   After ignoring the irrelevant operating expenses, what is the profit on cleaning services?   $5000 $10 000 $12 300 $7000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Jay Ltd wants to drop one of their service lines since it is showing a loss. The following details are provided for cleaning services.

 

Revenue                                                                                            $80 000

Less: Cost of cleaning products used                                                      30 000

Gross profit                                                                                        $50 000

 

Less: Operating expenses                                                              62 300

 

            Wages of cleaning staff                                         35 000

   Other items used for cleaning                                       3 000

            Depreciation building used for storage(allocated)      2 000

            Manager’s salary (allocated)                                            13 000

            Depreciation of cleaning equipment                             7 000

            Electricity(allocated)                                                          2 300

 

Loss on cleaning services                                                              $(12 300)

 

After ignoring the irrelevant operating expenses, what is the profit on cleaning services?

 

  1. $5000
  2. $10 000
  3. $12 300
  4. $7000
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