The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D 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 $13.05 per layout page. The budget for the Publication Department for the current year is as follows: Salaries Benefits $224,270 35,885 21,120 39,080 Supplies Office expenses Office depreciation 27,895 Computer depreciation 24,045 $372,295 Total The department expects to lay out 24,000 pages for the current year. The Publication Department office space and equipment would be used for future administrative needs, if the department' s function were purchased from the outside. Required: A. Prepare a differential analysis dated February 22 to determine whether TAG-D should lay out pages internally (Alternative 1) or purchase layout services from the outside (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon () will automatically appear if required. B. On the basis of your analysis in part (a) should the page layout work be purchased from an outside company? C. What additional considerations might factor into the decision making? A. Prepare a differential analysis dated February 22 to determine whether TAG-D should lay out pages internally (Alternative 1) or purchase layout services from the outside (Alternative 2). Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter *0. A colon will automatically appear if required. Differential Analysis Lay Out Pages Internally (Alternative 1) or Purchase Layout Services (Alternative 2) February 22 Lay Out Purchase Differential Pages Layout Effect on Internally Services Income (Alternative (Alternative (Alternative 1) 2) 2) 3 (Label) B. On the basis of your analysis in part (A), should the page layout work be purchased from an outside company? The benefit from using an outside service is shown to be 57,155 than performing the layout work internally. The fixed costs (depreciation expenses) in the budget are to the decision. Thus, the work should purchased from the outside on a strictly financial basis. C What additional considerations might factor into the decision making? Long-term employee morale Long-term employee productivity All of these are important additional considerations The ability to more directly control the quality and timing of the layout work by internal employees
