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Tom's Tax Services is a small accounting firm that offers tax services to small businesses and individuals. A local store owner has approached Tom about
Tom's Tax Services is a small accounting firm that offers tax services to small businesses and individuals. A local store owner has approached Tom about doing his taxes but is concerned about the fees Tom normally charges. The costs and revenues at Tom's Tax Services are presented below Annual Income Statement Sales revenue $ 720,000 Costs Labor Equipment lease Rent Supplies Tom's salary Other costs 477.000 50.400 43,200 32,400 75,000 22,800 Total costs s 700,800 Operating profit (loss)S 19.200 If Tom gets the store's business, he will incur an additional $60,000 in labor costs. Tom also estimates that he will have to increase equipment leases by about 10 peroent, supplies by 5 peroent, and other costs by 15 percent. Required a. What are the differentisl costs that would be incurred as a result of adding this new client? Total costs
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