Required information Problem 1-45 (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). Sales revenue Costs B-YOU Annual Income Statement Labor Equipment lease Rent Supplies Officers' salaries Other costs Total costs Operating profit (loss) $ 590,000 260,000 48,000 35,000 39,000 160,000 29,000 $571,000 $ 19,000 If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $87,000. 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 b Required: b. If the contract will pay $120,000, should B-You accept it?

Required information Problem 1-45 (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). Sales revenue Costs B-YOU Annual Income Statement Labor Equipment lease Rent Supplies Officers' salaries Other costs Total costs Operating profit (loss) $ 590,000 260,000 48,000 35,000 39,000 160,000 29,000 $571,000 $ 19,000 If B-You decides to take the contract to help the manager, it will hire a full-time consultant at $87,000. 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 b Required: b. If the contract will pay $120,000, should B-You accept it?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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