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Mary Tan is the controller for Duck Associates, a property management company;in Portland, Oregon. Each year, Tan and payroll clerk Toby Stock meet with the;external auditors about payroll accounting. This year, the auditors suggest that Tan;consider outsourcing Duck Associates? payroll accounting to a company specializing;in payroll processing services. This would allow Tan and her staff to focus on;their primary responsibility: accounting for the properties under management. At;present, payroll requires 1.5 employee positions?payroll clerk Toby Stock and a;bookkeeper who spends half her time entering payroll data in the system.;Tan considers this suggestion, and she lists the following items relating to outsourcing;payroll accounting;a. The current payroll software that was purchased for $4,000 three years ago;would not be needed if payroll processing were outsourced.;b. Duck Associates? bookkeeper would spend half her time preparing the weekly;payroll input form that is given to the payroll processing service. She is paid;$450 per week.;c. Duck Associates would no longer need payroll clerk Toby Stock, whose annual;salary is $42,000.;d. The payroll processing service would charge $2,000 per month.;Requirements;1. Would outsourcing the payroll function increase or decrease Duck Associates?;operating income?;2. Tan believes that outsourcing payroll would simplify her job, but she does not like;the prospect of having to lay off Stock, who has become a close personal friend.;She does not believe there is another position available for Stock at his current salary.;Can you think of other factors that might support keeping Stock, rather than;outsourcing payroll processing? How should each of the factors affect Tan?s decision;if she wants to do what is best for Duck Associates and act ethically

 

Paper#77178 | Written in 18-Jul-2015

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