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Each year, Knight Motors surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the

Each year, Knight Motors surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to RBG Associates, which has offered to conduct the survey and summarize results for $35,000. Craig Knight, the president of Knight Motors, believes that RBG will do a higher-quality job than his company has been doing but is unwilling to spend more than $10,000 above current costs. The head of bookkeeping for Knight has prepared the following summary of costs related to the survey in the prior year:

Mailing $17,500

Printing (done by Lester Print Shop) $6,000

Salary of Pat Fisher, part-time employee ?

who stuffed envelopes and summarized

data when surveys were returned

(130 hours x $16) $2,080

Share of depreciation of computer and

software used to track survey responses

and summarize results $1,200

Share of electricity/phone/etc. based on

square feet of space occupied by Pat

Fisher vs. entire company $600

Total $27,380

What is the incremental cost of going outside vs. conducting the survey as in the past?

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