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Megan Kris, the Vice-President for Human Resources in Learning, Inc. was concerned
about a recent memo she had recently received from the CEO's office regarding the
possibility of outsourcing the payroll function to Salary Experts, a growing provider of a
variety of human resource services. She was shocked that the CEO's office had discussed
this matter with the Board of Directors, but failed to consult her.
Megan was preparing for a meeting with the CEO. In reading the memo and its
attachments, Megan observed the following comparison of costs in a report prepared by
the controller's office:
Payroll department expenses:
Salaries of employees
$210,000
Share of utilities
75,000
Share of building rent
39,350
Manager’s salary
69,000
Computers and supplies
26,000
Other department expenses
20,000
Total annual expenses
$439,350
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