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

of $$220,800.$ An internally prepared report summarizes the Payroll Department's annual operating costs as follows:

EDC currently rents overflow office space for $$36,800$ 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 $$56,800.$

The Payroll Department's equipment would be transferred to other departments within the company to replace outdated equipment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.

Required:

What is the financial advantage $($disadvantage$)$ of outsourcing the Payroll Department?

Financial advantage of outsourcing