Palmetto Computer Shop is a small business located on the South Carolina coast. It specializes in computer repair and is known in the area for fast, reliable, and friendly service. Jeff Branson, the owner and primary repair specialist, has been working with computers since he learned about them during his military service. After teaching a class on spreadsheets at the local college, Jeff thinks he might be able to develop a training business to complement the repair work. Jeff has put together some estimates on the impact of a training program on revenues and costs. He estimates that revenues would grow by about 25 percent. Parts costs (mostly for demonstration machines) would increase by about 10 percent and labor costs by about 50 percent. The rent, which is based in part on revenue, would also increase by about 25 percent. Utilities would increase by about 30 percent and insurance costs by 15 percent. Other costs would increase by 20 percent. Using his spreadsheet skills, Jeff puts together the following estimated annual income statement assuming he offers both repair and training services.

Requireda. Based on the financial impact, should Jeff add training to his current repair business? Explain.b. Are there other factors he should consider? Explain briefly.

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Palmetto Computer Shop Annual Income Statement (Assuming Both Repalr and Tralning Services) 4 $ 476,000 5 Sales revenue 6 Costs 7 Parts 8 Labor 9 Rent 10 Utilities 11 Insurance 12 Other costs 13 Total costs 14 Operating profit (loss) $ 101,200 195,000 49,000 39,000 3,910 22,500 $ 410,610 $65,390 15 2/3.