incremental analysis 460543

Each year, Bixby Co. surveys 7,600 former and prospective customers regarding satisfaction and brand awareness. For the current year, the company is considering outsourcing the survey to MLM Associates, who have offered to conduct the survey and summarize results for $50,000. Andy Bixby, the president of Bixby Co., believes that MLM 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 Bixby has prepared the following summary of costs related to the survey in the prior year.

Mailing

$27,000

Printing (done by Jackson Print Shop)

9,000

Salary of Amy Smith, 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 Amy Smith 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 Bixby accept the MLM offer? Why or why not?