Xyz corporation operates a marketing research department

Reference no: EM13361582

XYZ Corporation operates a Marketing Research department. This department compiles information from published sources, and from its own consumer studies, to assist marketing personnel in forecasting product demand and making pricing and promotion decisions. A large marketing research firm has bid $260,000 per year for a three-year contract to perform the same services. For the most recent year, XYZ's controller determined the cost of operating the Marketing Research department to be $338,000:

Salary and fringes:
Senior researcher $71,000
Staff researcher 50,000
Clerical staff 72,000
VP Marketing(1) 56,000
Occupancy(2) 25,000
Subscriptions and travel (3) 64,000

(1) Represents 20% of cost of the VP, who is estimated to spend 20% of his time on marketing research issues.
(2) Occupancy costs are $25/sq ft: depreciation, $11; utilities, $10; maintenance, $4.Utilities are 70% variable; maintenance is an allocation of fixed costs. There are no plans for alternate use of the space.
(3) Subscriptions and travel costs would be borne by outside research firm.

a. Evaluate the cost differential to XYZ of outsourcing versus retaining this function.
b. Show the factors that XYZ management should consider in making this decision.

Reference no: EM13361582

Questions Cloud

Information about outsourcingdecisions on whether to : information about outsourcingdecisions on whether to outsource services such a payroll accounting and systems

Operating a firm using outsourcingdo you think it will ever : operating a firm using outsourcingdo you think it will ever be possible for firms to actually operate without a staff

Human resources and outsourcinghelp in how can start answer : human resources and outsourcinghelp in how can start answer this question.outsourcing parts to overseas suppliers and

Outsource activitysilver lakes is studying whether to : outsource activitysilver lakes is studying whether to outsource its human resources hr activities. salaried

Xyz corporation operates a marketing research department : xyz corporation operates a marketing research department. this department compiles information from published sources

Outsourcing for the us and for ibmis outsourcing good for : outsourcing for the us and for ibmis outsourcing good for ibm? for the us?1. what benefits do multinationals bring to

Outsourcingwrite a paper involving principles examples : outsourcingwrite a paper involving principles examples applications and accounting for management techniques. the paper

Fyc recommend an it outsourcing offshoring strategy pros : fyc recommend an it outsourcing offshoring strategy. pros and cons of outsourcing?debbie is compiling a report on

Role of hr outsourcing in your organizationhr outsourcingin : role of hr outsourcing in your organizationhr outsourcingin the session-long project you will be asked to select a

User Account

All Pages