Question

Obj. 1,2 E12-7 Make-or-buy decision Wisconsin Arts of Milwaukee employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, and other publications for the produc- lions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is

Answer 1

Dyferential Ancelyses Revenue Salvage $6500 $6500 $185000 (30000x9.5) Cost Puxhasepuce Salaries Benefits Suralis office ap Office deph Computer des Income (low) -$285000 - $285000 $185000 $50000 $ 50000 $30000 $30000 $25000 $ 25000 $ 70000 BR00000 $18000 $18000 $1500

B) Beneft pon using an outside senice is shown to be s 1500 greater than performing the layout Gock intemally The fixed cost in the budget are Delevant. Thus the walk should be perxhased from the outside on a strictly financial basis (C) Besoie electing to teeminate the 5 Employees the geogel sold Wéchee's should consider the long run impact of the decision. Speatically, tuhise page layout rates may grow faster than the cost of internal salaries, this favouring the use of employees cover the long term. aut It may wish to consider non economic factors such as ability to mox dieeth control the quality & himing of layout work by internal employees in won