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 is quoting a price of $21 per layout page. The budget for the Publication Department for the current year is as follows: Salaries Benefits Supplies Office expenses $263,300 59,900 31,900 39,900 35,900 23,900 $454,800 Office depreciation Computer depreciation Total The department expects to lay out 19,000 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. Differential Analysis Lay out Pages Internally (Alt. 1) or Purchase Layout Services (Alt. 2) February 22 Lay out Purchase Differential Pages Lay out Effect Internally Services on Income (Alternative 1) (Alternative 2) (Alternative 2) Sales price Costs: Purchase price of lay out work $ 501,900 X $ 501,900 Salaries 263,300 X 263,300 Benefits 59,900 X 59,900 Supplies 31,900 X 31,900 Office expenses 39,900 39,900 Office depreciation 35,900 X 35,900 X Computer depreciation 23,900 X 23,900 X 454,800 X Income (oss) $ 561,700 X $ - 106,900 10:2