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Infinity Designs, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling
Infinity Designs, 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 Home and Garden Expo. The exhibit will cost the company $12,000 for space. At the show, Infinity Designs 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 $36,000 over the next year as a result of the exhibit. For the previous year, profit was as follows: | |||||||
Revenue | $201,000 | ||||||
Less: | |||||||
Design supplies (variable cost) | $15,000 | ||||||
Salary of Samantha Spade (owner) | 80,000 | ||||||
Salary of Kim Bridesdale (full time employee) | 55,000 | ||||||
Rent | 18,000 | ||||||
Utilities | 6,000 | ||||||
Depreciation of office equipment | 3,600 | ||||||
Printing of advertising materials | 700 | ||||||
Advertising in Middleton Journal | 2,500 | ||||||
Travel expenses other than depreciation of autos (variable cost) | $2,200 | ||||||
Depreciation of company cars | 9,000 | ||||||
Required: | |||||||
Calculate the impact of the exhibit on company profit. |
Round to two decimal places.
Infinity Designs, 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 Home and Garden Expo. The exhibit will cost the company $12,000 for space. At the show, Infinity Designs 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 $36,000 over the next year as a result of the exhibit. For the previous year, profit was as follows: Revenue $201,000 Less: Design supplies (variable $15,000 cost) Salary of Samantha Spade 80.000 (owner) Salary of Kim Bridesdale (full 55.000 time employee Rent 18,000 Utilities 6,000 Depreciation of office 3,600 equipment Printing of advertising 700 materials Advertising in Middleton 2,500 Journal Travel expenses other than depreciation of autos $2,200 (variable cost) Depreciation of company 9.000 carsStep by Step Solution
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