Cindy's Limo Service provides transportation services in and around Middleville.Its profits have been 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 would increase by 40%.Rent and other costs will increase by 15%.
Required:
Prepare a report of the differential costs and revenues if the delivery service is added.Should management start up the delivery service? Explain your answer.

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The Answer of Cindy's Limo Service provides transportation services in and around Middleville.Its profits have been 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 would increase by 40%.Rent and other costs will increase by 15%.
Required:
Prepare a report of the differential costs and revenues if the delivery service is added.Should management start up the delivery service? Explain your answer.

Cindy's Limo Service Provides Transportation Services in and Around Middleville