Bates Courier Services provides delivery services in and around Butte City. Its profits have been declining, and management is planning to add an express service that is expected to increase revenue by $62,500 per year. The total cost to lease the necessary additional package delivery vehicles from the local dealer is $10,000 per year. The present manager will continue to supervise all services at no increase in salary. Due to expansion, however, the labor costs and utilities would increase by 50 percent. Rent and other costs will increase by 20 percent. The income statement assuming no expansion follows.

Required:

a. Prepare a report of the differential costs and revenues if the express service is added.

Note: Enter all revenue and cost amounts as positive numbers; enter any loss amount with a minus sign.

Campus Package Delivery Annual Income Statement Before Expansion
	Status Quo. No Express Service	Alternative: With Express Service	Difference
Sales revenue	197,000
Costs
Vehicle Leases	82,000
Labor	63,500
Utiities	11,400
Rent	20,000
Other costs	10,700
Manager's Salary	30,000
Total costs	$217,600
Operating profit (Loss)	(20,600)