Clear Seas Catering is considering whether to retain or replace its aging delivery truck. The old truck originally cost $55,000 when it was purchased nine years ago. It has a book value of $7,000. According to the mechanic who serviced the truck during its last oil change, the old truck has 3 years of useful life left. Clear Seas Catering wants to purchase a brand-new truck. The new truck costs $67,000 and has a 10-year useful life, after which

question 2 Limestone Hotel currently launders all of its towels and sheets in the basement of the hotel. The companys accounting department has reported the following annual costs of laundering internally. Limestone Hotel Laundry Production Costs For the Year Ended December 31, 2020 Per kg 11,000 kg Direct Materials $4.00 $44,000 Direct Labour $8.00 $88,000 Housekeeping Supervisor $7.00 $77,000 Depreciation of laundry equipment $4.00 $44,000 Allocated Fixed Costs $5.00 $55,000 Total Cost $28.00 $308,000 An external company has offered to process 11,000 kg of laundry per year at a price of $15 per kg. Also consider the following information: The laundry equipment has no salvage value and has no other use aside from processing the laundry. It cannot be sold. The fixed costs allocated to the laundry are common to the whole housekeeping department. The supervisor will take over duties in another department if the laundry is processed at the external company. If this is the case, the supervisors annual salary will drop to $69,300. Should the company continue to process laundry internally or begin using the external company? Do not enter dollar signs or commas in the input boxes. Round all answers to 2 decimal places. Limestone Hotel Laundry Outsource Analysis Production Cost Per kg Per kg Differential Cost Total Differential Cost (11,000 kg) In-house Outsource In-house Outsource Direct Materials $4.00 $Answer $Answer $Answer $Answer Direct Labour $8.00 $Answer $Answer $Answer $Answer Housekeeping Supervisor $7.00 $Answer $Answer $Answer $Answer Depreciation of Laundry Equipment $4.00 $Answer $Answer $Answer $Answer Allocated Fixed Costs $5.00 $Answer $Answer $Answer $Answer Outsource Price $Answer $Answer $Answer $Answer Total Relevant Cost $28.00 $Answer $Answer $Answer $Answer The company should: Answer Keep in-house