After an extensive cost-benefit analysis, Mercy General Hospital has made a decision to outsource its ambulance operations
Question:
After an extensive cost-benefit analysis, Mercy General Hospital has made a decision to outsource its ambulance operations to a private company. The administration has narrowed down its decision to two companies that meet the initial bid specifications.
Hell’s Bell’s Company submitted a bid of \($50,000\) per year plus \($30\) per hour of actual emergency service. Just-In-Time Company submitted a bid of \($100,000\) per year plus
\($25\) per hour of actual emergency service. Based on previous experience and trends, the administration expects between 12,500 and 15,000 hours of emergency service work during the next year.
a. What is the range of costs of the two ambulance services?
b. What other criteria should Mercy General consider in this decision?
Step by Step Answer:
Management Accounting In A Dynamic Environment
ISBN: 9780415839020
1st Edition
Authors: Cheryl S McWatters, Jerold L Zimmerman