Requlred Information

Problem $1\mathrm{.}45($Algo$)$ Cost Data for Managerial Purposes $($LO $1-3)$

$[$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$).$

If B$-$You decides to take the contract to help the manager, it will hire a full$-$time consultant at $$86,500.$ 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?