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Express Delivery Company ( EDC ) is considering outsourcing its Payroll Department to a payroll processing company for an annual fee of $ 2 2

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Express Delivery Company (EDC) is considering outsourcing its Payroll Department to a payroll processing company for an annual fee
of $220,000. An internally prepared report summarizes the Payroll Department's annual operating costs as follows:
EDC currently rents overflow office space for $36,000 per year. If the company closes its Payroll Department, the employees
occupying the rented office space could be brought in-house and the lease agreement on the rented space could be terminated with
no penalty.
If the Payroll Department is outsourced the payroll clerks will not be retained; however, the supervisor would be transferred to the
company's Human Resource Management Department. As a result of this transfer, the company would discontinue its efforts to hire a
new Human Resource Manager for whom it expected to pay an annual salary of $56,000.
The Payroll Department's equipment would be transferred to other departments within the company to replace outdated equipment
that would be recycled for zero salvage value.
Requlred:
What is the financial advantage (disadvantage) of outsourcing the Payroll Department?
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