Fifth Avenue Designs Is Studying Whether to Outsource Its Public

question 51

Multiple Choice

Fifth Avenue designs is studying whether to outsource its Public Relations (P/R) activities. Salaried professionals who earn $200,000 would be terminated; in contrast, administrative assistants who earn $50,000 would be transferred elsewhere in the organization. Miscellaneous departmental overhead (e.g., supplies, copy charges, overnight delivery) is expected to decrease by $20,000, and $35,000 of corporate overhead, previously allocated to Public Relations, would be picked up by other departments. If Fifth Avenue can secure needed P/R services locally for $230,000, how much would the company benefit by outsourcing?

• A)$0.
• B)($5,000).
• C)($10,000).
• D)$10,000.
• E)$25,000.

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Definitions:

DNA

DNA, or deoxyribonucleic acid, is the hereditary material in humans and almost all other organisms that carries genetic information.

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Future Value

The value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.

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Methods of preventing pregnancy after unprotected sexual intercourse, such as morning-after pills or certain intrauterine devices.