Torrey Pines is studying whether to outsource its Human Resources (H/R) activiti
ID: 2499853 • Letter: T
Question
Torrey Pines is studying whether to outsource its Human Resources (H/R) activities. Salaried professionals who earn $430,000 would be terminated; in contrast, administrative assistants who earn $144,000 would be transferred elsewhere in the organization. Miscellaneous departmental overhead (e.g., supplies, copy charges, overnight delivery) is expected to decrease by $32,000, and $21,000 of corporate overhead, previously allocated to Human Resources, would be picked up by other departments. If Torrey Pines can secure needed H/R services locally for $450,000, how much would the company benefit by outsourcing?
$12,000.
$43,000.
$156,000.
$187,000.
Nothing, as it would be cheaper to keep the department open.
*show your work*
Explanation / Answer
Answer is $12000
Salaried professionals 430000 Decrease In Miscellaneous departmental overhead 32000 Decrease in cash outflow 462000 Less Increase In outflow 450000 Saved 12000