Question

Maddox, a division of stanley enterprises, currently performs computer services for various departments of the firm. One of the services has created a number of operating problems, and management is exploring whether to outsource the service to a consultant. Traceable variable and fixed operating costs total $97,000 and $42,000, respectively, in addition to $35,000 of corporate administrative overhead allocated from stanley. If maddox were to use the outside consultant, fixed operating costs would be reduced by 70%. The irrelevant costs in maddox's outsourcing decision total:

Answer 1

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