The Theater Arts Guild of Dallas (TAG-D) employs five people in its Publication

Question

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 $12.87 per layout page. The budget for the Publication Department for the current year is as follows:

SALARIES                     $224,370

BENEFITS                        $36,150

SUPPLIES                        $20,870

OFFICE EXPENSES           $38,920

OFFICE DEPRECIATION     $27,830

COMPUTER DEPRECIATION $23,910

TOTAL                             $372,050

The department expects to lay out 23,000 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

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 Pages Internally

Purchase Layout Services

Differential Effect on Income

(Alternative 1)

(Alternative 2)

(Alternative 3)

LABEL

Differential Analysis

Lay Out Pages Internally (Alternative 1) or Purchase Layout Services (Alternative 2)

February 22

Explanation / Answer

LABEL Lay Out Pages Internally Purchase Layout Services Differential Effect on Income (Alternative 1) (Alternative 2) (Alternative 3) SALARIES                  2,24,370.00                                 -             2,24,370.00 BENEFITS                     36,150.00                                 -                36,150.00 SUPPLIES                     20,870.00                                 -                20,870.00 OFFICE EXPENSES                     38,920.00                  38,920.00                             -   OFFICE DEPRECIATION                     27,830.00                  27,830.00                             -   COMPUTER DEPRECIATION 23,910 23,910                             -   Purchase Price 23000* 12.87               2,96,010.00         -2,96,010.00 Net Income             -14,620.00

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