I will rate your answer as soon as you post the solutions. 3. 4 X Company is con

Question

I will rate your answer as soon as you post the solutions.

3.

4

          X Company is considering outsourcing its email system. Total costs related to last month's in-house email operation, when there were 3,515 employee mailboxes, were as follows: Company $18,278 4,218 7,733 Variable costs: Email license Virus protection license Miscellaneous 30,932 Fixed costs $14,847 of the computer hardware costs were common costs that will continue even if the email system is abandoned, and X Company will still need to pay for the virus protection license. Y Company has offered to operate an email system for X Company for $13.90 per mailbox Next year, X Company estimates that 3,800 mailboxes will be required per month Computer hardware to operate x Company By how much will X Company's monthly profits change if they decide to outsource its email function to Y Company instead of managing the service internally? [A positive number means that make costs are more than buy costs; a negative number means that make costs are less than the buy costs.] ill continue that mi tXComany estimates that 2 aoereaconmon costs Company's

Explanation / Answer

Solution.

2.

a.

(* Assume fixed cost is shunk cost.)

b.

Particular Unit Rate Amount Sales          62,400            19.00         1,185,600 Cost of goods sold          62,400               9.21          (574,704) Gross margin          62,400               9.79            610,896 Selling & admin cost          62,400               2.47          (154,128) profit          62,400               7.32            456,768 Fixed cost          62,400               3.67          (229,008) Net profit            227,760

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