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: TOM’S TAX SERVICES Annual Income Statement Sales revenue $ 738,000 Costs Labor 466,000 Equipment lease 50,300 Rent 42,900 Supplies 32,300 Tom’s salary 74,500 Other costs 20,900 Total costs $ 686,900 Operating profit (loss) $ 51,100 If Tom gets the store’s business, he will incur an additional $59,800 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 10 percent.

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:

TOM’S TAX SERVICES Annual Income Statement
Sales revenue	$	738,000
Costs
Labor		466,000
Equipment lease		50,300
Rent		42,900
Supplies		32,300
Tom’s salary		74,500
Other costs		20,900
Total costs	$	686,900
Operating profit (loss)	$	51,100

If Tom gets the store’s business, he will incur an additional $59,800 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 10 percent.