Question

Question 34 3 pts Torrey Pines is studying whether to outsource its Human Resources (H/R) activities. Salaried professionals who earn $460,000 would be terminated; in contrast, administrative assistants who earn $150,000 would be transferred elsewhere in the organization. Miscellaneous departmental overhead (e.g., supplies, copy charges, overnight delivery) is expected to decrease by $37,000, and $27,000 of corporate overhead, previously alicated to Human Resources, would be picked up by other departments. If Torrey Pines can secure needed H/R services locally for $480,000, how much would the company benefit by outsourcing? $17,000. $47.000. O $167.000. $197.000. Nothing, as it would be cheaper to keep the department open,

Answer 1

The correct answer is:

$17000

Explanation:

We first need to identify the items which are relevant for the decision making

Salaries of Terminated Professionals - Relevant = $460,000

Movement of Admin assistant - Irrelevant

Decrease in departmental overheads - Relevant = $37000

Decrease in corporate overhead - Irrelevant

Total Savings = 460000+37000 = $497,000

Cost of local resources = $480,000

Net Savings from Outsourcing = 497000-480000 = $17,000

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.