Tom\'s Tax Services is a small accounting firm that offers tax services to small
ID: 2419879 • Letter: T
Question
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 are presented below: If Tom gets the store s business, he will incur an additional S58.700 in labor costs Tomalso estimates that he will have to increase equipment leases by about 5 percent, supplies by 10 percent, and other costs by 15 percent. What are the differential costs that would be incurred as a result of adding this new client?Explanation / Answer
Statement of additional costs is given as below in the table
Nature of Cost Amount ($) Remarks Additional Labor 58,700 Given Equipment Lease 2,475 5% Increase ie 49,500*5% = 2,475) Supplies 3,170 10% Increase ie 31,700*10% = 3,170) Other Cost 3,210 15% Increase ie 21,400 * 15% = 3,210 Total 67,555