Differential revenue: WISCONSIN ARTS OF MILWAUKEE Purchase Outside Page Layout Services Differential Analysis Report Residual value of computer equipment Differential cost of alternatives: Purchase price of layout work: Number of pages Price per page Total differential costs Cost to perform internally: Salaries Benefits Supplies Office expenses Cost increase from purchasing outside layout services Net differential loss from using an outside service. 31,300 18 22,500 V 563,400 184,000 51,000 27,000 20,000 282,000 303,900 X Wisconsin Arts of Milwaukee employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, and other publications for the production. 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 $18.00 per layout page. The budget for the Publication Department is as follows: Salanes Benefits $184,000 51,000 Supplies 27,000 Office expenses 20,000 Office depreciation 50,700 Computer depreciation 33,800 Total $366,500 The department expects to lay out 31,300 pages. The computers used by the department have an estimated residual value of $22,500. The Publication Department office spa would be used for future administrative needs if the department's function were purchased from the outside. a. Prepare a differential analysis report for the make-or-buy decision, considering the differential revenues and costs. WISCONSIN ARTS OF MILWAUKEE Purchase Outside Page Layout Services Differential Analysis Report Differential revenue: Residual value of computer equipment Differential cost of alternatives: Purchase price of layout work: Number of pages Price per page Total differential costs Cost to perform internally Salaries Benefits Supplies Office expenses Cost increase from purchasing outside layout services Net differential loss from using an outside service 31.300 V 18 22,500 563,400 184,000 51,000 27,000 20,000 282,000 303,900