EX25-8

The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication De- partment. 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:

Salaries 22400

Benefits 36000

Supplies21000

Office Expenses 39000

Office Depreciation 28000

Computer Depreciation 24000

Total 372000

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 (Alternative 1) or purchase layout services from the outside (Alternative 2).

b.On the basis of your analysis in part (a), should the page layout work be purchased from an outside company.

c.What additional considerations might factor into the decision making?

Exercise 25-8 Name: Section: Score: 0% Key Code: [Key code here] Instructions Answers are entered in the cells with gray backgrounds. Cells with non-gray backgrounds are protected and cannot be edited. An asterisk (*) will appear to the right of an incorrect entry. Essay answers will not be graded Enter a zero in cells you would otherwise leave blank. a. Differential Analysis Layout Pages Internally or Purchase Layout Services February 22 Layout Pages Internally (Alternative 1) Costs: Purchase price of layout work Salaries Benefits Supplies Office expenses Office depreciation Computer depreciation Income (loss) b. [Key essay answer here] Purchase Layout Enter allServices costs as (Alternative 2) negative amounts. Enter a formula of pages x price per Differential Effect page. Enter all on as Income costs negative amounts. (Alternative 2) [Key essay answer here]