Question
Uli Interiors, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling
Uli Interiors, 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 Middleton Home and Garden Expo. The exhibit will cost the company $14,890 for space. At the show, Uli Interiors will present a slide show on a laptop, pass out brochures that were printed previously (the company printed more than needed), and show its portfolio of previous jobs. The company estimates that revenue will increase by $40,360 over the next year as a result of the exhibit. For the previous year, profit was as follows:
Revenue | $212,320 | ||||
Less: | |||||
Design supplies | $18,160 | ||||
Salary of Samantha Spade (owner) | 81,382 | ||||
Salary of Kim Bridesdale (full-time employee) | 56,519 | ||||
Rent | 18,979 | ||||
Utilities | 6,580 | ||||
Depreciation of office equipment | 4,240 | ||||
Printing of advertising materials | 841 | ||||
Advertising in Middleton Journal | 2,940 | ||||
Travel expenses other than depreciation of autos | 3,090 | ||||
Depreciation of company cars | 9,370 | 202,101 | |||
Net income | $10,219 |
Assume that design supplies and travel other than depreciation are variable costs. Calculate the impact of the exhibit on company profit. (Round intermediate calculations to 4 decimal places, e.g. 0.3215 and final answer to 0 decimal places, e.g. 125.)
Company profit will increase /decrease by: $ |
should /should not exhibit at the home show. |
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