Exercise E7-4 Incremental Analysis

Rustic Interiors, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company is considering exhibiting at the Middleton Home and Garden Expo. The exhibit will cost the company $13,000 for space. At the show, Rustic Interiors will present a slide show on a PC, pass out brochures that are printed previously, (the company printed more than needed), and show its portfolio of previous jobs. The company estimates that revenue will increase by $40,000 over the next year as a result of the exhibit. For the previous year, profit was as follows: Revenue $210,000 Less: Design supplies $16,000 Salary of samantha spade(Owner) 82,000 Salary Kim(full time employee) 56,000 Rent 19,000 Utilities 7,000 Depreciation of office equipment 4,000 Printing of advertising materials 800 Advertising in Middleton Journal 3,000 Travel Expenses other than depreciation autos 2,500 Depreciation of company cars 10,000 200,300 Net income 9,700 REQUIRED: Calculate the impact of the exhibit on company profit. Should the company exhibit at the home show? Supplies as a percent of revenue Percentage Travel as a percent of revenue ?Percentage? Less: Title ? ?Amount? Title? ?Amount? Title? ?Amount? Increase in profit ?Formula? Title? ????????