Express Delivery Company (EDC) is considering outsourcing its Payroll Department to a payroll processing company for an annual fee of $224,000. An internally prepared report summarizes the Payroll Departments annual operating costs as follows:

Supplies	$ 34,000
Payroll clerks salaries	124,000
Payroll supervisors salary	62,000
Payroll employee training expenses	14,000
Depreciation of equipment	24,000
Allocated share of common building operating costs	19,000
Allocated share of common administrative overhead	32,000
Total annual operating cost	$ 309,000

EDC currently rents overflow office space for $40,000 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 companys Human Resource Management Department. As a result of this transfer, the company would discontinue its efforts to hire a new Human Resource Manager that it expected to pay an annual salary of $60,000.

The Payroll Departments equipment would be transferred to other departments within the company to replace outdated equipment that would be recycled for zero salvage value.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