Question: I need help with this problem. Tom's Tax Services is a small accounting firm that offers tax services to small businesses and individuals. A local

I need help with this problem.
 I need help with this problem. Tom's Tax Services is a

Tom's Tax Services is a small accounting firm that offers tax services to small businesses and individuals. A local store owner has approached Tom about doing his taxes but is concerned about the fees Tom normally charges. The costs and revenues at Tom's Tax Services follow: TOM'S TAX SERVICES Annual Income Statement Sales revenue $ 722,000 Costa Labor 450,000 Equipment lease 49,700 Rent 41,800 Supplies 31,100 Tom's salary 74,300 Other costs 22,300 Total costa $ 677,200 Operating profit (loan) $ 44,800 If Tom gets the store's business, he will incur an additional $59,400 in labor costs, Tom also estimates that he will have to increase equipment leases by about 5 percent, supplies by 5 percent, and other costs by 5 percent. Required: a. What are the differential costs that would be incurred as a result of adding this new client? b. Tom would normally charge about $73,200 in fees for the services the store would require. How much could he offer to charge and still not lose money on this client? c. What considerations, other than costs, are necessary before making this decision

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

\f