Moss Inc currently processes payroll in its accounting deper

Moss, Inc. currently processes payroll in its accounting depertmemt. which costs the following per month Supplies Labor Allocated fixed overhead 900 450 $ 1825 Total monthly cost Moss could use a payroll processing arm instead. which would cost $1.350 per month, but the tirm would provide ll supplies If Moss used the outside firm, the accountants who currently process payroll would be reassigned to other accounting tasks How much would monthiy costs be affected if Moss switched to the payroll processing firm? O Decrease $225 O Increase $225 O Increase $875 O Decrease $475

Solution

C. Increase $875

Moss would still incur labor and overhead costs, so the only avoidable costs are supplies. $1,350 - $475 = $875increase in costs.