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The Popcorn State Group is an investment advisory firm specializing in high-income investors in upstate New York. Empire has offices in Rochester, Syracuse, and Buffalo. Operating as a profit center, each office receives central services which includes information technology, marketing, accounting, and payroll. Empire has a total of 20 investment advisors: 7 each in Syracuse and Rochester and 6 in Buffalo. The investment advisors receive a bonus equal to 2% of the regional office profit. Firm profits are the sum of the three regional office profits.

The following table summarizes the current profits per office after allocating central service costs based on office revenues but before calculating the bonuses.

As the manager of the Buffalo office, you feel the allocation method is not fair as the consumption of central services is not related to the level of revenue. You propose, instead, allocating the central services costs by the number of investment advisors.

Re-calculate the profits by office assuming this proposal is accepted. By how much will the total bonus for the Buffalo office change under this new allocation system?

\begin{tabular}{llll} \multicolumn{4}{c}{ Profits by Office } \\ Current Year (Millions) \\ \hline & Rochester & Syracuse & Buffalo \\ \hline Revenue & $16.00 & $14.00 & $20.00 \\ Operating expenses & (12.67) & (11.20) & (16.30) \\ Central services* & (1.92) & (1.68) & (2.40) \\ & $1.41 & $1.12 & $1.30 \\ \hline \end{tabular}

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