Zuppa Corporation Currently Maintains Its Own Printing Department

Multiple Choice

Zuppa Corporation currently maintains its own printing department. The annual costs of running this department are as follows: Somatic Copy Service has offered to provide Zuppa with all of its printing needs at a total annual cost of $68,000. If Zuppa went with this offer, they would close down their printing department. Except for 30% of the fixed costs, all of the annual printing department costs above can be avoided if it was closed down. Based on this information, would Zuppa be better off to keep its printing department or to shut it down and take Somatic's offer and by how much?

A) $4,000 better off to go with Somatic
B) $5,000 better off to keep the department
C) $20,000 better off to keep the department
D) $22,000 better off to go with Somatic