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Express Delivery Company (EDC) is considering outsourcing Its Payroll Department to a payroll processing company for an annual fee of $222,400. An Internally prepared report
Express Delivery Company (EDC) is considering outsourcing Its Payroll Department to a payroll processing company for an annual fee of $222,400. An Internally prepared report summarlzes the Payroll Department's annual operating costs as follows: EDC currently rents overflow office space for $38,400 per year. If the company closes its Payroll Department, the employees occupylng 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 that It expected to pay an annual salary of $58,400. The Payroll Department's equlpment would be transferred to other departments within the company to replace outdated equipment that would be recycled for zero salvage value.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 financlal advantage (disadvantage) of outsourcing the Payroll Department
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