declining, and management is planning to add a package delivery service that is expected to increase revenue by $275,000 per year. The total cost to lease additional delivery vehicles from the local dealer is $60,000 per year. The present manager will continue to supervise all services. Due to expansion, however, the labor costs and utilities will increase by 40%. Rent and other costs will increase by 15%.
Cindys Limo Service
Annual Income Statement
Operating profit (loss)
What are the total differential costs that will be incurred as a result of the expansion?
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