Question

Creative Landscaping wishes to increase their market share. They are looking into exhibiting at the Home and Garden Show in May. The cost of exhibit space is $25,000. Creative Landscaping will use leftover brochures from previous trade shows. They will not incur any additional labor expenses to participate in the exhibit. They will, however, have transportation costs of $750 to transport goods to and from the exhibit. Resources indicate they can expect a $60,000 increase in revenues next year as a result of the exhibit.
										Profit for the prior year was as follows:
Revenue		$      389,500
Less:
Landscaping Supplies	$         64,950
Owner's salaries	147,000
Sales staff salaries (full time)	85,800
Rent	26,800
Utilities	7,900
Depreciation of office equipment	5,800
Depreciation of landscaping equipment	6,400
Depreciation of vehicles	3,900
Advertising and Promotion costs	6,200	354,750
Net Income		$         34,750
What is the incremental profit or loss from exhibiting at the show?
Incremental Revenues:
Incremental Costs:
Should they exhibit at the show, why or why not?

Answer 1

• All working forms part of the answer
• Requirement 1

Incremental Revenues:
Expected increase in revenue		$                  60,000.00
Incremental Cost:
Cost of exhibit space	$                   25,000.00
Transportation cost	$                         750.00	$                  25,750.00
Net benefit / Incremental Benefit		$                  34,250.00

• Requirement 2

YES, the should exhibit at the show BECAUSE there is an incremental benefit of $34,250 in doing so.