EXERCISE 7-4. incremental analysis [LO 1] Rustic Interiors, an interior design company, has experienced a drop-in business due to an increase in interest rates and a corresponding slow- down in remodeling projects. To stimulate business, the company is considering exhibiting at the Middleton Home and Garden Expo. The exhibit will cost the company $15,000 for space. At the show, Rustic Interiors will present a slide show on a laptop, pass out brochures that were 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:

Calculate the impact of the exhibit on company profit. Should the company exhibit at the home show?

Please show all steps. Thank you.

Revenue $212,500 Less Design supplie Salary of Samantha Spade (owner) Salary of Kim Bridesdale (full-time employee) Rent Utilities Depreciation of office equipment Printing of advertising materials Advertising in Middleton Journal Travel expenses other than depreciation of autos Depreciation of company cars $18,000 82,000 56,000 19,000 7,000 4,000 800 3,000 3,000 10,000 202,800 $ 9,700 Net income