Make-or-Buy Decision for a Service Company

The Theater Arts Guild of Dallas (TAG-D) employs five 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 quoting a price of $18 per layout page. The budget for the Publication Department for the current year is as follows:

Salaries	$273,200
Benefits	62,100
Supplies	33,100
Office expenses	41,400
Office depreciation	37,300
Computer depreciation	24,800
Total	$471,900

The department expects to lay out 23,000 pages for the current year. The Publication Department office space and equipment would be used for future administrative needs, if the departments function were purchased from the outside.

a. Prepare a differential analysis dated February 22 to determine whether TAG-D should lay out pages internally (Alternative 1) or purchase layout services from the outside (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.

Differential Analysis
Lay out Pages Internally (Alt. 1) or Purchase Lay out Services (Alt. 2)
February 22
	Lay out Pages Internally (Alternative 1)	Purchase Lay out Services (Alternative 2)	Differential Effect on Income (Alternative 2)
Selling Price	$0	$0	$0
Costs:
Purchase price of lay out work	$fill in the blank f6606affefcb072_1	$fill in the blank f6606affefcb072_2	$fill in the blank f6606affefcb072_3
Salaries	fill in the blank f6606affefcb072_4	fill in the blank f6606affefcb072_5	fill in the blank f6606affefcb072_6
Benefits	fill in the blank f6606affefcb072_7	fill in the blank f6606affefcb072_8	fill in the blank f6606affefcb072_9
Supplies	fill in the blank f6606affefcb072_10	fill in the blank f6606affefcb072_11	fill in the blank f6606affefcb072_12
Office expenses	fill in the blank f6606affefcb072_13	fill in the blank f6606affefcb072_14	fill in the blank f6606affefcb072_15
Office depreciation	fill in the blank f6606affefcb072_16	fill in the blank f6606affefcb072_17	fill in the blank f6606affefcb072_18
Computer depreciation	fill in the blank f6606affefcb072_19	fill in the blank f6606affefcb072_20	fill in the blank f6606affefcb072_21
Income (loss)	$fill in the blank f6606affefcb072_22	$fill in the blank f6606affefcb072_23	$fill in the blank f6606affefcb072_24