Express Delivery Company $($EDC$)$ is considering outsourcing its Payroll Department to a payroll processing company for an annual fee of $$221,000.$ An internally prepared report summarizes the Payroll Department$$s annual operating costs as follows:

Supplies $ $31,000$

Payroll clerks$$ salaries $121,000$

Payroll supervisor$$s salary $59,000$

Payroll employee training expenses $11,000$

Depreciation of equipment $21,000$

Allocated share of common building operating costs $16,000$

Allocated share of common administrative overhead $29,000$

Total annual operating cost $ $288,000$

EDC currently rents overflow office space for $$37,000$ 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$$s Human Resource Management Department. As a result of this transfer, the company would discontinue its efforts to hire a new Human Resource Manager for whom it expected to pay an annual salary of $$57,000.$

The Payroll Department$$s equipment would be transferred to other departments within the company to replace outdated equipment that would be recycled for zero salvage value.

Required:

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