Exercise E7-4 Incremental Analysis Rustic Interiors, an interior design company,

Question

Exercise E7-4 Incremental Analysis Rustic 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 $13,000 for space. At the show, Rustic Interiors 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 $40,000 over the next year as a result of the exhibit. For the
previous year, profit was as follows:
Revenue $210,000
Less:
Design supplies $16,000
Salary of samantha spade(Owner) 82,000
Salary Kim(full time employee) 56,000
Rent 19,000
Utilities 7,000
Depreciation of office equipment 4,000
Printing of advertising materials 800
Advertising in Middleton Journal 3,000
Travel Expenses other than depreciation autos 2,500
Depreciation of company cars 10,000 200,300
Net income 9,700
REQUIRED: Calculate the impact of the exhibit on company profit. Should the company exhibit at the home show?

Supplies as a percent of revenue Percentage
Travel as a percent of revenue ?Percentage?
Less:
Title ? ?Amount?
Title? ?Amount?
Title? ?Amount?
Increase in profit ?Formula?
Title? ???????? Exercise E7-4 Incremental Analysis Rustic 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 $13,000 for space. At the show, Rustic Interiors 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 $40,000 over the next year as a result of the exhibit. For the
previous year, profit was as follows:
Revenue $210,000
Less:
Design supplies $16,000
Salary of samantha spade(Owner) 82,000
Salary Kim(full time employee) 56,000
Rent 19,000
Utilities 7,000
Depreciation of office equipment 4,000
Printing of advertising materials 800
Advertising in Middleton Journal 3,000
Travel Expenses other than depreciation autos 2,500
Depreciation of company cars 10,000 200,300
Net income 9,700
REQUIRED: Calculate the impact of the exhibit on company profit. Should the company exhibit at the home show?

Supplies as a percent of revenue Percentage
Travel as a percent of revenue ?Percentage?
Less:
Title ? ?Amount?
Title? ?Amount?
Title? ?Amount?
Increase in profit ?Formula?
Title? ????????

Explanation / Answer

Exercise E7-4 Incremental Analysis Rustic Interiors, an interior design company,

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