Make-or-Buy Decision for a Service Company

The Theater Arts Guild of Dallas (TAG-D) employs 5 people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $20 per layout page. The budget for the Publication Department for the current year is as follows:

Salaries	$330,000
Benefits	75,000
Supplies	40,000
Office expenses	50,000
Office depreciation	45,000
Computer depreciation	30,000
Total	$570,000

The department expects to lay out 25,000 pages for the current year. The Publication Department office space and equipment would be used for future administrative needs, if the department's function were purchased from the outside.

Question Content Area

a. Prepare a differential analysis dated February 22 to determine whether TAG-D should Lay Out Pages Internally (Alternative 1) or Purchase Layout Services (Alternative 2). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.