Reference no: EM132654700

After several significant failures the company is thinking of outsourcing all its data processing requirements to seven oaks data stream. an analysis of current operation suggests that every dollar increase in service revenues, variable data processing costs increase by $.10. fixed costs for the data processing facility are $2500,000.

An analysis of the fixed costs revealed the following

Data processing manager's salary $90000,

data processing staff salaries 1500000

allocation building costs to data processing 350000,

server depreciation 500000,

data centre security costs 50000

Problem 1: If data processing centres were closed the processing manager would be transfered to another managerial position. the position is currently open and needs to be filled paying a ssalry of 90000. Sap has offered all data processing requirements at a fee that amounts to .08$ per dollar plus a flat annual fee of $250000. Under what conditions should the offer be accepted