Tom's Tax Services is a small accounting firm that offers tax services to small businesses...
90.2K
Verified Solution
Link Copied!
Question
Accounting
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 concerned about the fees Tom normally charges. The costs and revenues at Tom's Tax Services follow: TOM'S TAX SERVICES Annual Income Statement $ 736,000 Sales revenue Costs Labor Equipment lease Rent Supplies Tom's salary Other costs 470,000 48,500 41,800 31,900 73,400 21,000 S 686,600 49,400 Total costs Operating profit (loss) If Tom gets the store's business, he will incur an additional $58,300 in labor costs. Tom also estimates that he will have to increase equipment leases by about 10 percent, supplies by 5 percent, and other costs by 10 percent. Required a. What are the differential costs that would be incurred as a result of adding this new client? Total costs 0 b. Tom would normally charge about $73,700 in fees for the services the store would require. How much could he offer to charge and still not lose money on this client? Reduce the fees
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
