The law firm of Hannan, Taylor, and Masteller has been asked to represent a local client. All legal proceedings will be held out of town in Boston.

Required The law firm’s accountant has asked you to help determine the incremental cost of accepting this client.

Classify each of the following items on the basis of their relationship to this engagement. Items may have multiple classifications.

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Relevant costs 1. The case will require three attorneys to stay four nights in a Boston hotel. The predicted hotel bill is $2,400. 2. Hannan, Taylor, and Masteller's professional staff is paid $2,000 per day for out-of-town assignments. 3. Last year, depreciation on Hannan, Taylor, and Masteller's office was $25,000. 4. Round-trip transportation to Boston is expected to cost $250 per person. 5. The firm has recently accepted an engagement that will require partners to spend two weeks in Chi- cago. The predicted out-of-pocket costs of this trip are $8,500. 6. The firm has a maintenance contract on its com- puter equipment that will cost $2,200 next year. Opportunity Outlay Irrelevant costs Outlay Sunk