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Ch 1 Grading HW Seve 5 7 points eBook Problem 1-42 (Algo) Cost Data for Managerial Purposes (LO 1-3) Campus Package Delivery (CPD) provides
Ch 1 Grading HW Seve 5 7 points eBook Problem 1-42 (Algo) Cost Data for Managerial Purposes (LO 1-3) Campus Package Delivery (CPD) provides delivery services in and around Paradise. Its profits have been declining, and management is planning to add an express service that is expected to increase revenue by $345,000 per year. The total cost to lease the necessary additional package delivery vehicles from the local dealer is $21,000 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. Required: a. Prepare a report of the differential costs and revenues if the express service is added. (Enter all amounts as positive numbers.) Campus Package Delivery Income Statement References Status Que: Alternative No Express Service With Express Service Difference Sales revenue Costs Vehicle leases Labor $ 757,000 297,000 228,000 Utilities 30,000 Rent 73,000 Other costs 34,000 Manager's Salary 114,000 Total costs $ 776,000 $ 0$ 0 Operating profit (loss) $ (19.000)
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