Required information

Problem $1-45($Algo$)$ Cost Data for Managerial Purposes $($LO $1-3)$

Skip to question

$[$The following information applies to the questions displayed below.$]$

B$-$You is a consulting firm that works with managers to improve their interpersonal skills. Recently, a representative of a high$-$tech research firm approached B$-$You's owner with an offer to contract for one year with B$-$You to improve the interpersonal skills of a newly hired manager. B$-$You reported the following costs and revenues during the past year $($before the proposed contract$).$

B$-$YOUAnnual Income StatementSales revenue$ $700,000$Costs$$Labor$260,000$Equipment lease$70,000$Rent$35,000$Supplies$72,000$Officers' salaries$160,000$Other costs$62,000$Total costs$ $659,000$Operating profit $($loss$)$$ $41,000$

If B$-$You decides to take the contract to help the manager, it will hire a full$-$time consultant at $$92,500.$ The equipment lease will increase by $20$ percent. Supplies will increase by an estimated $10$ percent and other costs by $15$ percent. The existing building has space for the new consultant. No new offices will be necessary for this work.

Problem $1-45($Algo$)$ Part a

Required:

a$.$ What are the differential costs that would be incurred as a result of taking the contract?