JW Enterprises is considering a new marketing campaign thta will require the adi
ID: 2773619 • Letter: J
Question
JW Enterprises is considering a new marketing campaign thta will require the adition of a new computer programmer and new software. The programmer will occupy an office in JW's current building and will be paid $8,000 per month. The software license costs $1,000 per month. The rent for the building is $4,000 per month. JW's computer system is always on, so running the new software will not change the current monthly electric bill of $900. The incremental expenses for the new marketing campaign are:
a. $8,000 per month
b. $13,000 per month
C. $13,900 per month
d. $9,000 per month
Explanation / Answer
By hiring the programmer and installing the software, JW incurs below additional costs:
Salary of programmer as it would not be paid if he is not hired.
Software licence costs as it would not be paid if not purchased
Other costs such as building rent and electricity bill are costs that would be incurred irrespective of the hiring of programmer and software purchase events.
So Incremental Costs = 8000 + 1000 = $9000
So the correct choice is D
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