Required information

Skip to question

[The following information applies to the questions displayed below.]

B-You is a consulting firm that works with managers to improve their interpersonal skills. Recently, a representative of a high-tech research firm approached B-You's owner with an offer to contract for one year with B-You to improve the interpersonal skills of a newly hired manager. B-You reported the following costs and revenues during the past year.

B-YOU
Annual Income Statement
Sales revenue	$	248,600
Costs
Labor		115,000
Equipment lease		17,000
Rent		13,600
Supplies		10,200
Officers' salaries		80,000
Other costs		7,300
Total costs	$	243,100
Operating profit (loss)	$	5,500

If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $83,000. Equipment lease will increase by 5 percent. Supplies will increase by an estimated 10 percent and other costs by 15 percent. The existing building has space for the new consultant. No new offices will be necessary for this work.

Required:

a. What are the differential costs that would be incurred as a result of taking the contract?