The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay
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Salaries .............. $ 224,000
Benefits ............. 36,000
Supplies ............. 21,000
Office expenses .......... 39,000
Office depreciation .......... 28,000
Computer depreciation ....... 24,000
Total............... $ 372,000
The department expects to lay out 25,000 pages for 2014. The computers used by the department have an estimated residual value of $ 9,000. The Publication Department office space and equipment would be used for future administrative needs, if the department’s function were purchased from the outside.
a. Prepare a differential analysis dated February 22, 2014, to determine whether TAG-D should lay out pages internally (Alternative 1) or purchase layout services from the outside (Alternative 2).
b. On the basis of your analysis in part (a), should the page layout work be purchased from an outside company?
c. What additional considerations might factor into the decision making?
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Financial And Managerial Accounting
ISBN: 9781337119207
14th Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
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