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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 $51 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 Direct labour costs Variable overhead Total hours of housekeeping services per year Total fixed overhead $4 $27 $1 3,260 $52,440 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).) Net Income Increase (Decrease) Number of hours: 3,260 In-house Outsource Cleaning supplies 13040 $ 0 13040 Direct labour 88020 0 88020 Variable overhead 3260 0 3260 Fixed costs 52440 26220 26220 Purchase price 0 166260 -166260 Total cost $ 156760 ta 192480 $ -35720 At what level of service (in hours) would Jenson generally be indifferent between providing housekeeping services or outsourcing them, assuming that 50% of fixed costs can be eliminated? (Round answer to O decimal places, e.g. 125.) Jenson's indifference point hours
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