Calculate and compare the forecast total accounting costs in the year following MEXIT under the outsource option (B); to assess which option will be most economical for Telford Engineering in the future.

Enter the accountancy department costs for Option B (to the nearest $M'000). For your answer only provide the first three numbers and do not include any symbols, for example, "543"
     

A B C D E F Option A G Retaining accountancy staff in-house, but operating with the reduced workforce Staff members who resign leading up to MEXIT are not to be replaced, and the company will continue to operate the accountancy function in-house with a reduced staff level. Your salary will remain at $70,000 as you were recently appointed The retained accounting staff post-restructure, will be paid at 10% more than their current salaries. To manage their additional responsibilities and to adopt new working practices, but an additional 25% will be added to the total payroll costs (after pay rises) of the remaining accountancy department staff, due to the need for increased overtime and the costs of hiring temporary workers to cover peak times. Note: The remaining staff left under the restructure Option, after the earlier redundancies, will be as follows: Head of accounting (unchanged salary) + 2 Fully Qualified (FQ) Accountants + 3 Part Qualified (PQ) Accountants + 4 Accounting Technicians Option B Outsourcing Telford Engineering has identified a global business services partner off-shore. The annual cost of outsourcing the accounting function per annum is forecast to be $292,000. The GBS Company will take over the highly systemised and transactional operations of payables, receivables, payroll and credit control. Long-term asset and treasury and cash management will remain in-house. Outsourcing would take place immediately following MEXIT (in about one year's time) and annual outsourcing costs are estimated to remain constant over time. The total cost of making the staff redundant under the outsource option is estimated to be 25% The retained skeleton staff, post-outsourcing, will be paid at 20% more than their current salaries 4 5 6 7 of their current annual salaries. Outsourcing would mean that 40% of the other non-staff accounting department costs could be saved each year 8 19 20 Note: The remaining staff to be retained under the Outsource Option will be as follows: 21 Head of Accounting (unchanged salary) + 2 Fully Qualified (FQ) Accountants and one Part Qualified (PQ) Accountant 22 72