Question
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 previousjobs.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$201,000Less:Design supplies (variable cost)$15,000Salary of Samantha Spade (owner)80,000Salary of Kim Bridesdale (full time employee)55,000Rent18,000Utilities6,000Depreciation of office equipment3,600Printing of advertising materials700Advertising in Middleton Journal2,500Travel expenses other than depreciation of autos (variable cost)$2,200Depreciation of company cars9,000Required:Calculate the impact of the exhibit on company profit.
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