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Jenson College provides its own housekeeping services. The College director would like to outsource this service and has found a company that will provide the
Jenson College provides its own housekeeping services. The College director would like to outsource this service and has found a company that will provide the service for $49 per hour. The following information has been collected about the cost per hour to the college for performing its own housekeeping services: Cost per hour of service: Cleaning supplies $3 Direct labour costs $27 Variable overhead $1 3.040 Total hours of housekeeping services per year Total fixed overhead $55,080 Determine whether Jenson College should outsource housekeeping, assuming that 50% of fixed costs can be eliminated if the service is outsourced. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g.-15,000 or parenthesis, e.g. (15,000).) Number of hours: 3,040 In-house Outsource Net Income Increase (Decrease) Cleaning supplies $ $ $ Direct labour Variable overhead Fixed costs Purchase price Total cost $ $ $ $ $ Jenson College outsource the services
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