Outsource activity
Silver Lakes is studying whether to outsource its Human Resources (HR) activities. Salaried professionals who earn $397,000 would be terminated; in contrast, administrative assistants who earn $120,000 would be transferred elsewhere within the company. Miscellaneous departmental overhead is expected to decrease by $20,000 and $25,000 of corporate overhead, previously allocated to HR would be picked up by other departments. If Silver Lakes can secure needed HR services locally for $410,000, what would the net savings (net cost) by outsourcing?