Fast Track Delivery Service operates a small auto repair facility to service its fleet of 35 delivery vehicles. Fast Track’s repair facility occupies space in an industrial area close to the company’s home office. Fast Track is considering using a local repair shop to service its vehicles. Fast Track’s $120,000 administrative expense is allocated based on the number of employees. Fast Track employs 50 people. Information about the repair facility follows:

A dependable automotive service center has offered to provide maintenance contracts for each vehicle for $3,000 per vehicle. If Fast Track accepts the offer it would close the maintenance facility. The company estimates that it can sell the maintenance equipment for $10,000.
Required: The president of Fast Track has asked you to prepare a report that details the qualitative and quantitative factors that should be considered in making the decision about whether to close the maintenance facility. Your report should discuss the relevant qualitative and quantitative factors for each alternative and include a relevant cost schedule. Your report should conclude with a wellsupported recommendation.

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Direct cost information: Wages for three employees Cost of equipment used Original estimated useful life of equipment Estimated remaining useful life of equipment Building rent per year Utilities Cost of automobile parts Miscellaneous cost Indirect cost information: Administrative expense $64,000 $33,500 12 years 9 years $6,000 $2,000 $30,000 $1,500 $7,200