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Question 0 2 / 0 3 Calculate and compare the forecast total accounting costs in the year following MEXIT under the outsource option ( B

Question
02/03
Calculate and compare the forecast total accounting costs in the year following MEXIT under the outsource option (B); to assess which option will be most economical for Telford Engineering in the future.
Enter the accountancy department costs for Option B (to the nearest $M'000). For your answer only provide the first three numbers and do not include any symbols, for example, "543"Option B
Outsourcing
Telford Engineering has identified a global business services partner off-shore. The annual cost of outsourcing the accounting function per annum is forecast to be $292,000. The GBS Company will take over the highly systemised and transactional operations
of payables, receivables, payroll and credit control. Long-term asset and treasury and cash management will remain in-house.
Outsourcing would take place immediately following MEXIT (in about one years time) and annual outsourcing costs are estimated to remain constant over time. The total cost of making the staff redundant under the outsource option is estimated to be 25%
of their current annual salaries. Outsourcing would mean that 40% of the other non-staff accounting department costs could be saved each year.
The retained skeleton staff, post-outsourcing, will be paid at 20% more than their current salaries.
Note: The remaining staff to be retained under the Outsource Option will be as follows:
Head of Accounting (unchanged salary)+2 Fully Qualified (FQ) Accountants and one Part Qualified (PQ) Accountant

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