Each year, ACE Engines surveys 7,600 former and prospective customers regarding

Question

Each year, ACE Engines surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to RBG Associates, who have offered to conduct the survey and summarize results for $50,000. Robert Ace, the president of ACE Engines, believes that RBG will do a higher quality job than his company has been doing but is unwilling to spend more than $12,000 above current costs. The head of bookkeeping for ACE has prepared the following summary of costs related to the survey in the prior year.

             Mailing                           $27,000                           Printing (done by Lester Print Shop)                           $9,000                           Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned (130

Explanation / Answer

Hi,

Please find the answer as follows:

Incremental Costs:

Mailing = 27000

Printing = 9000

Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned (130

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