Torrey Pines Is Studying Whether to Outsource Its Human Resources

Multiple Choice

Torrey Pines is studying whether to outsource its Human Resources (H/R) activities. Salaried professionals who earn $390,000 would be terminated; in contrast, administrative assistants who earn $120,000 would be transferred elsewhere in the organization. Miscellaneous departmental overhead (e.g., supplies, copy charges, overnight delivery) is expected to decrease by $30,000, and $25,000 of corporate overhead, previously allocated to Human Resources, would be picked up by other departments. If Torrey Pines can secure needed H/R services locally for $410,000, how much would the company benefit by outsourcing?

A) $10,000.
B) $35,000.
C) $130,000.
D) $155,000.
E) Nothing, as it would be cheaper to keep the department open.