Metlock 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 $$50$ 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

$$5$

Direct labour costs

$$30$

Variable overhead

$$2$

Total hours of housekeeping services per year

$3,130$

Total fixed overhead

$$47,580$

$($a$)$

Determine whether Metlock 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, es$-15,000$ or

parenthesis, es$.(15,000).$ While alternate approaches are possible, irreievant fixed costs should be included in both options when

solving this probiem.$)$

Number of hours:

$3,130$

In$-$house

Outsource

Net Income

Increase $($Decrease$)$

Cleaning supplies

$

$

$

Direct labour

Variable overhead

Fixed costs

Purchase price

Total cost