The following exhibit shows the monthly costs for the company Beta SpA in running a department Euros 20,000 3,500 COSTS Manufacturing Labour Salary of the department manager Direct materials Industrial depreciations Vanous running costs Manufacturing overhead 15.000 20,000 5,000 5.500 TOTAL 69,000 The total costs are equal to 69,000. If the same operation was performed by a supplier, the purchasing costs would be equal to 30,000 is it worth eliminating the mentioned centre and giving the production to an outside company? When answering consider that a) the workforce cannot be redistributed in other production departments and cannot be sacked, this includes the manager: b) the depreciations are referred for 10,000 to a machine that can be sold with a complete cost recovery and for 10,000 to the part of a building used also by other departments, c) the running costs can be eliminated by 2,000, d) the manufacturing overheads are indirect and non-ceasing