In: Finance
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 |
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jobs. |
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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: |
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Revenue |
$201,000 |
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Less: |
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Design supplies (variable cost) |
$15,500 |
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Salary of Samantha Spade (owner) |
80,000 |
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Salary of Kim Bridesdale (full time employee) |
55,000 |
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Rent |
18,000 |
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Utilities |
6,000 |
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Depreciation of office equipment |
3,600 |
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Printing of advertising materials |
700 |
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Advertising in Middleton Journal |
2,500 |
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Travel expenses other than depreciation of autos (variable cost) |
$2,000 |
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Depreciation of company cars |
9,000 |
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Required: |
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Calculate the impact of the exhibit on company profit. |