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Make or Buy Decision for a Service Company 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 papes are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service quoting a price of $17 per layout page. The budget for the Publication Department for the current year is as follows: Salaries $190,700 Benefits 43,400 Supplies 23,100 Office expenses 28,900 Office depreciation 26,000 Computer depreciation 17,300 Total $329,400 The department expects to lay out 17,000 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. 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). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Lay out Pages Internally (Alt. 1) or Purchase Lay out Services (Alt. 2) February 22 Lay out Pages Internally (Alternative 1) Purchase Lay out Services (Alternative 2) Differential Effect on Income (Alternative 2) Selling Price $0 $0 $0 Costs: Purchase price of lay out work Salaries Benefits Supplies Office expenses Office depreciation Computer depreciation Income (loss) b. The benefit from using an outside service is shown to be than performing the lay out work internally, The fixed costs (depreciation expenses) in the budget are to the decision. Thus, the work should purchased from the outside on a strictiy financial basis. C. Before electing to the five employees, the guild should consider the of the decision

Make or Buy Decision for a Service Company 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 papes are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service quoting a price of $17 per layout page. The budget for the Publication Department for the current year is as follows: Salaries $190,700 Benefits 43,400 Supplies 23,100 Office expenses 28,900 Office depreciation 26,000 Computer depreciation 17,300 Total $329,400 The department expects to lay out 17,000 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. 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). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Lay out Pages Internally (Alt. 1) or Purchase Lay out Services (Alt. 2) February 22 Lay out Pages Internally (Alternative 1) Purchase Lay out Services (Alternative 2) Differential Effect on Income (Alternative 2) Selling Price $0 $0 $0 Costs: Purchase price of lay out work Salaries Benefits Supplies Office expenses Office depreciation Computer depreciation Income (loss) b. The benefit from using an outside service is shown to be than performing the lay out work internally, The fixed costs (depreciation expenses) in the budget are to the decision. Thus, the work should purchased from the outside on a strictiy financial basis. C. Before electing to the five employees, the guild should consider the of the decision

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 8E
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Make or-Buy Dečision for a Service Company The Theater Arts Guld 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 quoting a price of $17 per layout page. The budget for the Publication Department for the current year is as follows: Salaries $190,700 Benefits 43,400 Supplies 23,100 Office expenses 28,900 Office depreciation 26,000 Computer depreciation 17,300 Total $329,400 The department expects to lay out 17,000 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. 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). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Lay out Pages lInternally (Alt. 1) or Purchase Lay out Services (Alt. 2) February 22 Lay out Pages Internally (Alternative 1) Purchase Lay out Services (Alternative 2) Differential Effect on Income (Alternative 2) Selling Price $0 $0 $0 Costs: Purchase price of lay out work Salaries Benefits Supplies Office expenses Office depreciation Computer depreciation Income (loss) b. The benefit from using an outside service is shown to be (depreciation expenses) in the budget are outside on a strictly financial basis. than performing the lay out work internally, The fixed costs to the decision. Thus, the work should purchased from the C. Before electing to the five employees, the guild should oonsider the of the decision.
Transcribed Image Text:Make or-Buy Dečision for a Service Company The Theater Arts Guld 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 quoting a price of $17 per layout page. The budget for the Publication Department for the current year is as follows: Salaries $190,700 Benefits 43,400 Supplies 23,100 Office expenses 28,900 Office depreciation 26,000 Computer depreciation 17,300 Total $329,400 The department expects to lay out 17,000 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. 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). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Lay out Pages lInternally (Alt. 1) or Purchase Lay out Services (Alt. 2) February 22 Lay out Pages Internally (Alternative 1) Purchase Lay out Services (Alternative 2) Differential Effect on Income (Alternative 2) Selling Price $0 $0 $0 Costs: Purchase price of lay out work Salaries Benefits Supplies Office expenses Office depreciation Computer depreciation Income (loss) b. The benefit from using an outside service is shown to be (depreciation expenses) in the budget are outside on a strictly financial basis. than performing the lay out work internally, The fixed costs to the decision. Thus, the work should purchased from the C. Before electing to the five employees, the guild should oonsider the of the decision.
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