E12-7 Make-or-buy decision The Wisconsin Arts of Milwaukee employs five people in its Publication Depart- ment. These people lay out pages for pamphlets, brochures, and other publica- tions for the 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 $12.50 per layout page. The budget for the Publication Department for 2013 is as follows: Salaries $185,000 Becerit: 50,000 Swales 30,000 penses 25,000 C e depreciation 70,000 computer depreciation 18,000 $378,000 The department expects to lay out 30,000 pages for 2013. The computers used by the department have an estimated residual value of $6,500. The Publication Tota! Hummer G17 X for 4 D E F 10 Cells with non-gray backgrounds are protected and cannot be edited. 11 A red asterisk (*) will appear in the row immediately to the right of an incorrect answer G H I J WISCONSIN ARTS OF MILWAUKEE Proposal to Purchase Outside Page Layout Services Differential revenue Salvage of computer equipment Differential expenses: Purchase of layout work: Number of pages 30,000 Price per page Total Differential cost to perform internally: Salaries 185,000 Benefits 50,000 Supplies 30,000 Office expenses 25,000 Cost savings from purchasing layout services Total differential gain (loss) from using an outside service From a financial perspective, is it advisable to purchase outside page layout services? Explain Ex. 12-7