Clara owns a fine dining restaurant in Macau. Last year, her sales were not as high as she would have liked. To help increase her performance, Clara decided to hire a consultant, Dino, to help bringing in more customers. Clara hired Dino on a trial basis for the first 4 months of the year. Dino charged for a one-off initial fee of $5,000 at the very beginning, and a commission of 1% of sales every month. At the end of April, Clara wants to evaluate whether she should continue to pay for Dino’s advice as she expects to spend less than 2.5% of total sales on consultant service.

Required

a. Calculate Clara’s consultant cost% in the whole 4-month trial period.

b.The average sales of the first four months last year was $92,238. Compared with last year result, should Clara renew contract with Dino?