Question 3 The Human Resources division of a federal government department is contemplating whether they should continue writing job descriptions for new positions. A local company, HR Associates Inc., can write job descriptions for a fee of $800 per description. The division's director, Julianne Payne, has assembled the cost of her staff writing one job description: Variable Costs: - Extra paper and toner (lots of rough drafts) - Overtime paid to classification officer $50 200 500 Fixed Costs - Portion of classification officer's salary per job description ($50,000:100 job descriptions) - Portion of manager's salary to a review description ($90,000 - 300 job descriptions) 300 Total cost of writing 1 job description $1,050 The director thinks that the fee charged by HR Associates is reasonable and would save the division $250 per job description ($1,050 $800). The division writes 300 job descriptions every year. If the job descriptions are given to HR Associates to write, the classification officers and the director would not be laid off. Instead, they would be able to devout their freed-up time to their other tasks. (They are very busy people.) a) If Ms. Payne decides to outsource the writing of job descriptions, what effect would this have on the total costs of her division? Should her division continue to write job descriptions? Total Cost for Outsourcing=$800 per description*300 descriptions=240,000 Total Relevant Cost for Manufacturing=250*300+50,000=125,000 Effect= (115000) Therefore, if Ms. Payne decides to outsource the writing of job descriptions, the total cost of her division will increase $115,000. Therefore, her division should continue writing job descriptions