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The law firm XYZ, LLP is considering the possibility of representing a new client. All legal proceedings will be carried out in City Z and not in City A as is usually the case with the rest of the firm's clients. It is estimated that the case will require the assignment of 3 lawyers and 10 days of work in City Z. A total of 1003 hours are expected to be billed to the new client. The law firm's accountant is trying to determine the incremental cost of accepting this client and has asked for your help.

REQUIRED: Indicate the total relevant cost by analyzing the following elements in relation to accepting the new client.

1. The case will require the three lawyers to stay 9 nights in a hotel in City Z. The expected hotel bill is $300 per night plus 17% taxes and hotel service charges.

2. The firm's lawyers are paid $2,000 per day for assignments outside of City A.

3. Last year, the depreciation of XYZ, LLP's office in City A was $25,000.

4. Round trip transportation to City Z is expected to cost $150 per person.

5. The firm has recently accepted another legal engagement that will require several partners to spend two weeks in City W. The expected expenses for this trip are $25,000.

6. The firm has a maintenance contract for its photocopier equipment that will cost $2,200 next year.

7. If the firm accepts the new client and sends lawyers to City Z, it will have to decline a conflicting engagement in City A that would have provided a net cash inflow of $15,000.

8. The firm's variable overhead costs are $125 per client hour.

9. The firm pays $900 a year for a subscription to a legal magazine.

10. Last year, the firm paid $22,500 to upgrade the central air conditioning equipment in its building.

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