Make-or-Buy Decision for a Service Company The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These peuple lay out pages for parnphlets, brochures, magazines, and other publications for the TAG-D pruductions. 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 $13 per layout page. The budget for the Publication Department for the current year is as follows: Salaries Renefits Supplies Office expenses Office depreciation Computer depreciation Total $224,000 36,000 21,000 39,000 28,000 24,000 $372.000 The department expects to lay out 24,000 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. a. Prepare a differential analysis dated February 22 to determine whether TAG D should layout pages internally (Alternativa 1) or purchase layout services from the outside (Alternative 2). If an amount is zera, enter 'O'. 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 Layout Services (Alt. 2) February 22 Lay Out Purchase Differential Pages Layout Effect Internally Services on Income (Alternative 1) (Alternative 2) (Alternative 2) Sales price 0 0 0 Costs: Purchase price of layout wark o 312.08 312.000 x Salaries 224,00 Benefits M4,000 Supplies 21.000 Office expenses Office depreciation Computer depreciation Income (Loss) 354.06 X Feesteck - Check My Wark s. For the make and buy alternatives provide the costs. Determine the cifferential effect on income of the revenues, costs, and income foss) by Subtracing alternative 1 from alienative 2. than performing the layout work Internally. The fixed costs (depreciation expenses in the budget are to the decision. Thus, the work should purchased from the b. The benefit from using an outside service is shown to be outside on a strictly financial basis. C. Before electing to the five employees, the Guild should consider the of the decision