Differential Analysis

Case Studies

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,AN pitfprential Analysis Caqq,$tpdy.

Madeira Travel Services provides travel agents access to sophisticated travel informati'oo dild analysis systems over the Web. The company combines these tools with access to benchmarking data, includingl e-mail and wireless communiCations, so that travel agents can instantly evaluate airline fares and hotel rates.

$8,050 monthly salary for two information technology s;taff members who work onll c)n e-mail

Madeira Travel Services; Pres;ident Joey Madeira is happy with the company's growth. 'fo better focus on client service, Madeira is considering outsOurcing some functions. CFO Tom Lee suggests that the company's e-mail may be the place to start. Madeira asks Lee to identify the costs related to Madeira Travel Senrices' in-house Microsoft Exchange mail application, winich has 23A0 mailboxes. This information is below \/ariable Costs Per mailbox per month

$7 $1 $4

$9+,300 Per month $16,L00 per month

E-mail license

Other variable costs Frixed Costs

Reqqifed: . Compute the total cost ;ler mailbox per month of

Madeira Travel Services" current e-mail function. . Suppose that a leader provider of Internet-messaging

outsourcing services offt:rs to host Madeira e*mail function for $9 per mailhox per month. If Madeira agrees, it still would neetd virus protection, computer hardware and one IT person. Should they accept the offer?

. Suppose for an addition,ill $5 per mailbox per month, the outsourcer would prrrvide virus protection, quarantine, and content'management services, which would eliminate Madeira's need for IT person and virus protection. Should they accept the additional services?

. Show all computations.