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Drake Consulting provides consulting services at an average price of $120 per hour and incurs variable costs of $60 per hour. Assume average fixed costs
Drake Consulting provides consulting services at an average price of $120 per hour and incurs variable costs of $60 per hour. Assume average fixed costs are $3,900 a month Drake has developed new software that will revolutionize billing for companies. Drake has already invested $125,000 in the software. It can market the software as is at $40,000 per client and expects to sell to 15 clients. Drake can develop the software further, adding integration to Microsoft products at an additional development cost of $190,000. The additional development vill allow Drake to sell the software for $52,000 each but to 20 clients. Should Drake sell the software as is or develop it further? Complete the following differential analysis to compare selling the software as is with processing the software further. (Enter decreases to profits with a parentheses or minus sign. For the difference in total net revenue, use a parentheses or a minus sign if processing further will decrease total net revenue) Process Sell As Is Further Difference Expected revenue from selling to 15 clients Expected revenue from selling to 20 clients Additional costs of processing Total net revenue
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