Question 1 Etameko Electronics brags about their competitive edge in their industry, with regards to being consumer-focused, as well as providing reliable electronic products and end-user support. Etameko Electronics is currently faced with a crucial decision regarding its customer support department, due to recent restructuring and company team transformation. As a result, Etameko must now decide whether to outsource its customer support services to a specialized third-party provider or continue managing these services in-house. The following information is available: 1. With current operations, Etameko Electronics records a total allocated cost of N\$1,500,000 in the in-house service-based customer support department. 2. The company currently has 20 in-house customer support staff, with an average salary of N\$50,000 per year per employee. These costs have been accounted for in the above cost of the customer support department. The employees of the customer support department would be retrenched if they are no longer needed, which will cost the company an additional cost of N$4,000 per employee. 3. The external customer support service provider offers a comprehensive package for a fixed annual fee of N\$1,200,000. 4. Etameko plans to launch new electronic products in the next financial year, which are budgeted at an annual advertising budget of N$300,000. 5. Transition costs for outsourcing: N\$100,000. 6. Due to increased capacity, Etameko estimates that outsourcing would result in a 5% increase in customer satisfaction, leading to an expected 20% in sales revenue. 7. For the success of the new product launch, Etameko needs to train the sales staff on the specifications, which will require a financial investment of N\$50,000. 8. Etameko Electronics Company allocates overheads to service departments based on labour hours. uired: a) Prepare a financial analysis using the information above, to advise the management of Etameko Electronics Company if they should outsource customer support or provide it inhouse. Where appropriate, provide a reason for costs considered irrelevant to this decision. b) Identify and explain non-financial factors that would need to be considered by Etameko Electronics in making the above decision. 4 Marks