Lon-Capa 4 BKF.com provides banks access to sophisticated financial information and analysis via the web, enabling them to instantly evaluate both personal and commercial loan applications. To better focus on its client services, BKF.com is considering outsourcing some of its internal functions. Its controller, Jenny Lee, suggests starting with the company's internal email system. She recently attended a conference and learned that Continental Airlines, DellNet, GTE, and NBC outsource their email function to companies such as Google and Yahoo. Lee began her analysis by identifying the total costs related to last month's in-house email operation, when there were 3,965 employee mailboxes: Variable Costs [per mailbox] Email license $17,446 Virus protection license $5,551 Miscellaneous $9,516 Fixed Costs Computer hardware $38,064 Total $70,577 Lee analyzed the computer hardware costs further and determined that 40% were allocated costs that will continue even if the email system is abandoned, 15% were direct costs that will be avoided if the email system is abandoned, and the balance were monthly salaries for two, equally paid information technology staff members who worked only on the email system. Mail.com, a leading provider of internet messaging outsourcing services, offers to host BKF.com's email function for $14.50 per mailbox. BKF.com will still need the virus protection software even if it outsources the email function to Mail.com, but It will only need one of the Information technology staff members to maintain the virus protection and quarantine suspicious emails. Also, another company has agreed to rent some of the computer storage space that will be available if BKF.com outsources its email function for $3,100 a month. Finally, Lee estimates that 4,155 mailboxes will be required per month next year. REQUIRED By how much will BKF.com's monthly profits change if they decide to outsource its email function to Mail.com instead of managing the service internally? (Note: if the buy costs are less than the make costs, enter the difference as a positive number; if the make costs are less than the buy costs, enter the difference as a negative number.) Lon-Capa 4 BKF.com provides banks access to sophisticated financial information and analysis via the web, enabling them to instantly evaluate both personal and commercial loan applications. To better focus on its client services, BKF.com is considering outsourcing some of its internal functions. Its controller, Jenny Lee, suggests starting with the company's internal email system. She recently attended a conference and learned that Continental Airlines, DellNet, GTE, and NBC outsource their email function to companies such as Google and Yahoo. Lee began her analysis by identifying the total costs related to last month's in-house email operation, when there were 3,965 employee mailboxes: Variable Costs [per mailbox] Email license $17,446 Virus protection license $5,551 Miscellaneous $9,516 Fixed Costs Computer hardware $38,064 Total $70,577 Lee analyzed the computer hardware costs further and determined that 40% were allocated costs that will continue even if the email system is abandoned, 15% were direct costs that will be avoided if the email system is abandoned, and the balance were monthly salaries for two, equally paid information technology staff members who worked only on the email system. Mail.com, a leading provider of internet messaging outsourcing services, offers to host BKF.com's email function for $14.50 per mailbox. BKF.com will still need the virus protection software even if it outsources the email function to Mail.com, but It will only need one of the Information technology staff members to maintain the virus protection and quarantine suspicious emails. Also, another company has agreed to rent some of the computer storage space that will be available if BKF.com outsources its email function for $3,100 a month. Finally, Lee estimates that 4,155 mailboxes will be required per month next year. REQUIRED By how much will BKF.com's monthly profits change if they decide to outsource its email function to Mail.com instead of managing the service internally? (Note: if the buy costs are less than the make costs, enter the difference as a positive number; if the make costs are less than the buy costs, enter the difference as a negative number.)
