8. Make-or-Buy Decision for a Service Company

Make-or-Buy Decision for a Service Company The Theater Arts Gulid of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. 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 quoting a price of $13 per layout page. The budget for the Publication Department for the current year is as follows: The department expects to lay out 24,000 pages for the current year. 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 to determine whether TAG-D should lay out pages internally (Aiternatlve 1) or purchase layout services from the outside (Alternative 2). If an amount is zero, enter " O ". Differential Analysis Lay Out Pages Internally (Alt. 1) or Purchase Layout Services (Alt. 2) b. The benefit from using an outside service is shown to be, than performing the layout work internally. The fixed costs (depreciation expenses) in the budget are to the decision. Thus, the work should purchased from the outside on a strictly financial basis. c. Before electing to the five employees, the TAG-D should consider the of the decision