Bates Courier Services provides delivery services in and around Butte City. Its profits have been declining,...

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Bates Courier Services provides delivery services in and around Butte City. Its profits have been declining, and management is planning to add an express service that is expected to increase revenue by $62,500 per year. The total cost to lease the necessary additional package delivery vehicles from the local dealer is $10,000 per year. The present manager will continue to supervise all services at no increase in salary. Due to expansion, however, the labor costs and utilities would increase by 50 percent. Rent and other costs will increase by 20 percent. The income statement assuming no expansion follows. Required: a. Prepare a report of the differential costs and revenues if the express service is added. Note: Enter all revenue and cost amounts as positive numbers; enter any loss amount with a minus sign. Bates Courier Services Annual Income Statement before Expansion Status Quo: No Express Service Alternative: With Express Difference Service Sales revenue Costs $ 193,000 Vehicle leases Labor Utilities Rent Other costs Manager's salary Total costs Operating profit (loss) 78,000 61,500 10,600 20,000 10,300 30,000 $ 210,400 $ (17,400) Bates Courier Services provides delivery services in and around Butte City. Its profits have been declining, and management is planning to add an express service that is expected to increase revenue by $62,500 per year. The total cost to lease the necessary additional package delivery vehicles from the local dealer is $10,000 per year. The present manager will continue to supervise all services at no increase in salary. Due to expansion, however, the labor costs and utilities would increase by 50 percent. Rent and other costs will increase by 20 percent. The income statement assuming no expansion follows. Required: a. Prepare a report of the differential costs and revenues if the express service is added. Note: Enter all revenue and cost amounts as positive numbers; enter any loss amount with a minus sign. Bates Courier Services Annual Income Statement before Expansion Status Quo: No Express Service Alternative: With Express Difference Service Sales revenue Costs $ 193,000 Vehicle leases Labor Utilities Rent Other costs Manager's salary Total costs Operating profit (loss) 78,000 61,500 10,600 20,000 10,300 30,000 $ 210,400 $ (17,400)