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Home Q & A Board Other Fields Homework Help Business Accounting
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LiChan LiChan
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7 years ago
Allison's Construction Company is a local company that does all its accounting in-house. It currently employs a controller, 5 accountants, 2 bookkeepers and 1 tax accountant. The controller of the company suggested that an outside accounting firm may provide the tax function cheaper than what they are paying their tax accountant. It currently pays the tax accountant $2,000 per week plus benefits and payroll taxes of $750 per week. The rest of the accounting department's costs will not change. A local CPA has offered to provide the service for $13,000 per month. If Allison accepts the offer, it would eliminate the tax accountants position and save all the wages and benefits in addition to eliminating $500 a week in miscellaneous costs.

REQUIRED:
1.)   What are the relevant costs associated with this outsourcing decision?
2.)   Should Allison's continue to do the tax in-house or should it outsource to the local CPA firm?
Textbook 
Survey of Accounting: Making Sense of Business

Survey of Accounting: Making Sense of Business


Edition: 1st
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hol23hol23
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7 years ago
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LiChan Author
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#2
7 years ago
Wow!
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