RO CHAPTER 7 The Use of Cost Intormation in Management Decision Making EXCEL EXERCBE 7-4, Incremental Analysis O 11 Rotic Interiors, an interior design company, has experienced a drop in business due to an increase in interest rstes and a correspoeding dow- down in remodeling projects. To stimalate bosin Middlleton 1tome and Garden Expo. The exhibit will cost the company S15,500 ton show, Rustic Interlors will present a side show on a previously (the company printed more than seeded), and in of reevious obs The company estimates that revenue will increase by $40,000 over the next year as a result of the exhibit. For the previous year, proit was as follows the company is considering exhibiting t sgace the printed Revenue $212.500 Less Design supplies Salary of Samantha Spade (owner) Salary of Kim Bridesdale (full-time employee)k $18.000 82.000 56,000 Rent 19.000 Utilities Depreciation of office equlpment Printing of advertising materials Advertising in Middleton Journal Travel expenses other than depreciation of autos Depreciation of company cars 7,000 4.000 800 3,000 3,000- 202.800 10,000 Net income S 9,700 REQUIRED Calculate the impact of the exhibit on company peofit. Should the company exhibit at the bome show EXERCISE 7-5. Incremental Analysis LO 11 Each year, Knight Motors surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the com- pany is considering outsourcing the survey to RBG Associates, which has offered to conduct the survey and summarize results for $35,000. Craig Knight, the president of Knight Motors, believes that RBG will do a higher-quality job than his company has been doing but is umwilling to spend more than $10,000 above current costs. The head of bookkeeping for Knight has prepared the following summary of costs related to the survey in the prior year: EXCEL $17.500 Mailing Printing (done by Lester Print Shop) Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned (130 hours x $16) Share of depreciation of computer and software used to track survey responses 6,000 2,080 1,200 and summarize results Share of electricity/phone/etc. based on square feet of space occupied by Pat Fisher vs. entire company Total 600 $27.380 What is the incremental cost of going outside vs. conducting the survey as in the past? Will Craig Knight accept the RBG offer? REQUIRED EXERCISE 7-6. Incremental Analysis and Opportunity Costs [LO 1,2] Finn's Seafood Restaurant has been approached by New England Investments, which wants to hold an employee recognition EXCEL