Question

Main Menu Contents Grades Course Contents MODULE 2 PROBLEMS ... LON-CAPA PROBLEMS. PROBLEM # 4 MAKE OR BUY 4 Timer Notes Evaluate Feedback Print Info BKF.com provides banks access to sophisticated financial information and analysis via the web, enabling them to instantly evaluate both personal and commercial loan applications. To better focus on its dient services, BKF.com is considering outsourcing some of its internal functions. Its controller, Jenny Lee, suggests starting with the company's internal email system She recently attended a conference and learned that GTE and NBC outsource their email function to companies such as Google and Yahoo. Lee began her analysis by identifying the total costs related to last month's in-house email operation, when there were 3,615 employee mailboxes: Variable costs Email license Virus protection license $20.967 3.615 9.399 Computer hardware Total costs 37,596 $71,577 Lee analyzed the computer hardware costs, identifying its three components: 1. $15,790 were allocated costs that will continue even the email system is abandoned 2. $7,143 were non-personnel direct costs that will be avoided the email system is abandoned. 3. $14,662 were the monthly salaries for two equally paid interns who worked only on the email system, Mail.com, a leading provider of internet messaging outsourcing services, has offered to host BKF.com's email function for $14.00 per mailbox. BKF.com will still need to pay the virus protection license fee and one of the interns to maintain the virus protection software, A company has agreed to pay BKF.com 54,800 a month to use the computer storage space that will become available if BKF.com outsources its email function Finally, Lee estimates that 3.860 mailboxes wil be required per month next year. REQUIRED (6 tries] By how much will BKF.com's monthly profits change they decide to outsource is malfunction to Mail.com instead of managing the service internally? Note: the buy costs are less than the make costs, enter the difference as a positive number, if the make costs are less than the buy costs, enter the difference as a negative number, using the minus sign instead of parentheses.

Answer 1

Incremental Savings / (costs) on out source of e-mail function - Particulars, Amounted) Sarings in email license fee 20967 Sarings in Miscellaneous expense 9399 fined Miscellaneous expense Costs Savings in Non personnel dreat cost 1143 Sarings in monthly salary. 7331 (14662x1/2) Income from use of storage 4800 Additional Cost payable for outsourcry (54040) (3860 x 14) (4400) Thus it is not adnable to outsource the internet email function.