Change Management Corp. is a consulting firm that helps companies adapt organizational structures to current industry trends. Recently, one of its officers was approached by a representative of a high-tech research firm that offered a six-month contract to Change Management for some help in reorganizing the company. Change Management reported the following costs and revenues during the past year.

CHANGE MANAGEMENT CORP.

Annual Income Statement Sales \eVenue ches sb DRee a $1,500,000 Costs EaDOr? ., ..2 : Sia Ake enh eae eS 700,000 EQuipmentilcascmraven chia eat eee 104,000 z ROOT Be coe Ore ee ee 120,000 oP, SUP DNES yan ean deere eee cere ae 60,000 Oiicens: SalanleS 5 a meee aes eens 400,000 ONCE COS Srna cake. Nubmer ede i ned ator 50,000 IOTANCOSIS Grdaackc ueRu see e $1,434,000 Operating |Pr OtiierasAae eee eee $ 66,000

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If Change Management decides to take the six-month contract to help the company reorganize, it will hire two part-time consultants at $150,000 (salaries and benefits) and add support staff at a cost of $25,000. Equipment lease will increase by 12 percent because the company must buy certain computer equipment. Supplies and other costs will increase by an estimated 15 percent. The existing building has space for the new consultant. In addition, management believes that no new officers will be necessary for this work and that officers’ salaries will not change.

Required

a. What costs would be incurred as a result of taking the contract?

b. _ If the contract will pay $200,000 for the six months, should Change Management accept it?

c. What considerations, other than costs, are necessary before making this decision