Make-or-Buy Decision Wisconsin Arts of Milwaukee employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, and other publications for the 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 is as follows: Salaries $180,000 Benefits 54,000 Supplies 29,000 Office expenses 24,000 Office depreciation 61,900 Computer depreciation 41,300 Total $390,200 The department expects to lay out 34,400 pages. The computers used by the department have an estimated residual value of $27,500. The Publication Department office space would be used for future administrative needs if the department's function were purchased from the outside. a. Prepare a differential analysis report for the make-or-buy decision, considering the differential revenues and costs. Enter differential revenues and cost savings as positive amounts; enter differential expenses and cost increases as negative amounts. WISCONSIN ARTS OF MILWAUKEE Purchase Outside Page Layout Services Differential Analysis Report Differential revenue: Residual value of computer equipment Differential cost of alternatives: Purchase price of layout work: Number of pages 8 Price per page Total differential costs o $ Differential cost of alternatives: Purchase price of layout work: Number of pages Price per page Total differential costs Cost to perform internally: Salaries Benefits Supplies $ Office expenses b. Which costs are irrelevant to the Wisconsin Arts decision? 1. The residual value of the computers 2. The office depreciation 3. The computer depreciation 4. The service price to the outside company Select the irrelevant cost(s) from above choices. c. What additional considerations are relevant to the Wisconsin Arts decision? 1. The impact on employees 2. Potential customer dissatisfaction with the work done by the outside service 3. Loss of direct control over the quality and timing of the layout work 4. The possibility that future layout rates could grow faster than the cost of internal salaries Select the relevant consideration(s) from the list above