X Company is considering outsourcing its email system. Total costs related to last month’s in-house email operation, when there were 3,725 employee mailboxes, were as follows:
| Variable costs: | |
| Email license | $18,625 |
| Virus protection license | 5,215 |
| Miscellaneous | 16,390 |
| Fixed costs | |
| Computer hardware | 24,585 |
$10,326 of the computer hardware costs were common costs that will continue even if the email system is abandoned, and X Company will still need to pay for the virus protection license. Y Company has offered to operate an email system for X Company for $11.10 per mailbox. Next year, X Company estimates that 4,190 mailboxes will be required per month.
By how much will X Company’s monthly profits change if they decide to outsource its email function to Y Company instead of managing the service internally? [A positive number means that make costs are more than buy costs; a negative number means that make costs are less than the buy costs.]
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