Question

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:

Answer 1

Answer:-

Variable Cost -

Design Supplies as per revenue = $ 16,000/$201,000 =0.0796

Travel expenses as per revenue = $2,400/$201,000

=0.0119

Increase in revenues $36000

Less-

Cost of company exhibit 12,000

Increases in supplies (0.0796 × $36,000) 2865.6

Increases in travel (0.0119 × $36000) 428.4

Increases in profit 51,294

Yes, the company should have exhibit because the impact of profit is positive.