Reference no: EM131624848

Exercise 7-5

Each year, Macaron Motors surveys 7,500 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to RBG Associates, which has offered to conduct the survey and summarize results for $34,655. Craig Knight, the president of Macaron Motors, believes that RBG will do a higher-quality job than his company has been doing but is unwilling to spend more than $10,000 above current costs. The head of bookkeeping for Macaron has prepared the following summary of costs related to the survey in the prior year:

Mailing                                                                 $17,800

Printing (done by Lester Print Shop)                            5,500

Salary of Pat Fisher, part-time employee

who stuffed envelopes and summarized

data when surveys were returned

(130 hours x $13)                                                1,690

Share of depreciation of computer and

software used to track survey responses

and summarize results                                         1,200

Share of electricity/phone/etc. based on

square feet of space occupied by Pat

Fisher vs. entire company                                        640

Total                                                                   $26,830

What is the incremental cost or savings of going outside vs. conducting the survey as in the past?

The incremental tlof going outside $

Will Craig Knight accept the RBG offer?

Craig Knight accept the RBG offer.