Abdullah Clinic provides its own housekeeping services. The clinic director would like to outsource this service, and has found a company that will provide the service for $30 per hour. The following information has been collected about the cost per hour to the clinic for performing its own housekeeping services:

Cost per hour of service:

Cleaning supplies $ 3

Direct labor $20

Variable overhead $2

Total hours of housekeeping services per year 3,000

Total fixed overhead $36,000

a. Should Abdullah Clinic outsource housekeeping, assuming that $30,000 of fixed costs can be eliminated if the service is outsourced? Provide calculations to support your answer.

b. Describe two qualitative factors that might affect this outsourcing decision.