Each year, ACE Engines surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to RBG Associates, who have offered to conduct the survey and summarize results for $50,000. Robert Ace, the president of ACE Engines, believes that RBG will do a higher-quality job than his company has been doing, but is unwilling to spend more than $12,000 above current costs. The head of bookkeeping for ACE has prepared the following summary of costs related to the survey in the prior year.
|
Mailing |
$27,000 |
|
Printing (done by Lester Print Shop) |
9,000 |
|
Salary of Pat Fisher, part-time employee who stuffed envelopes and summarized data when surveys were returned (130 x $16) |
2,080 |
|
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 |
600 |
|
Total |
$39,880 |
Prepare an incremental analysis in good form to determine the impact on profit of going outside versus conducting the survey as in the past. Will ACE accept the RBG offer? Why or why not?
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