Question

Question 3 (1 point) 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 previous jobs. 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 $201,000 Less: Design supplies (variable cost) $16,000 Salary of Samantha Spade (owner) 80,000 Salary of Kim Bridesdale (full time employee) 55,000 Rent 18,000 Utilities 6,000 Depreciation of office equipment 3,600 Printing of advertising materials 700 Advertising in Middleton Journal 2,500 Travel expenses other than depreciation of autos (variable cost) $2,200 Depreciation of company cars 9,000 Required: Calculate the impact of the exhibit on company profit. Round to two decimal places.

Answer 1

		Previous Year		Estimated for current Year
revenue		201000	201000+36000	237000
less expenses
design supplies	16000		16000
salary to samantha	80000		80000
salary to Kim	55000		55000
rent expense	18000		18000
utilities expense	6000		6000
depreciation expense-office equipment	3600		3600
priniting expense	700		700
advertising expense	2500		2500
travel expense	2200		2200
depreciation expense- car	9000		9000
rent expense of space for exibhit			12000
total of expense		193000		205000
net profit		8000		32000
Profit will increase by	32000-8000	24000