Recently a commercial laundry service, The Washouse Company, approached you with an offer to clean and fold the hotel's linens and towels. Washouse is an established laundry service that does laundry for area hospitals, restaurants, repair shops and a local gym. They will pick up and drop off laundry each weekday with next-day turnaround. The quoted price is S0.32/pound Sunrise will be billed weekly with payment terms at 7 days after receipt of invoice. Each rental generates 3.5 lbs. of Since its founding, all Sunrise Hotels did their own laundry. Each property has a commercial washing machine, dryer and folding machine. Recently you read an article in Hotelier Monthly that extolled the benefits of outsourcing achieved by many full-service hotels Your hotel has a washer, dryer, folder (iron) and water treatment equipment with a book value of $25,500. Purchased 4 years ago, the equipment was estimated to have a useful life of ten (10) years. If you outsource the laundry, the equipment can be sold. The salvage value is S4,500 Space for the laundry room n most properties is obtaned by using two guest rooms at the rear of the property. If the laundry is outsourced, the laundry room can be converted to guest rooms Conversion costs would be about S30,000 for furnishings (bed, drapes, table, television, etc.), fixtures (lights, toilet, shower, etc.) and flooring. Rooms are remodeled every seven (7) years Laundry supplies (detergent, bleach, etc.) were estimated using a regression model for all cleaning supplies. You have determined that the variable cost is S0.19/rental. Variable costs for laundry room water, gas and electric were estimated at S0.12/rental. Reviewing financial and operational data you learn that repair costs averaged S4,725 annually over the past five years. The is supervised by the Head Housekeeper and 25% of her wage allocated to the laundry department. The head housekeeper is paid S9.30 per hour and works full time (2,000 hours annually). The laundry worker is paid $8.06 per hour. The laundry room can process 80 pounds of laundry per hour Required 1. Use the relevant cost framework to analyze the outsourcing decision if you expect 60% 2. Re-do the analysis with the assumption that occupancy remains the same next year 3. What qualitative factors should be considered? What should you do? Recently a commercial laundry service, The Washouse Company, approached you with an offer to clean and fold the hotel's linens and towels. Washouse is an established laundry service that does laundry for area hospitals, restaurants, repair shops and a local gym. They will pick up and drop off laundry each weekday with next-day turnaround. The quoted price is S0.32/pound Sunrise will be billed weekly with payment terms at 7 days after receipt of invoice. Each rental generates 3.5 lbs. of Since its founding, all Sunrise Hotels did their own laundry. Each property has a commercial washing machine, dryer and folding machine. Recently you read an article in Hotelier Monthly that extolled the benefits of outsourcing achieved by many full-service hotels Your hotel has a washer, dryer, folder (iron) and water treatment equipment with a book value of $25,500. Purchased 4 years ago, the equipment was estimated to have a useful life of ten (10) years. If you outsource the laundry, the equipment can be sold. The salvage value is S4,500 Space for the laundry room n most properties is obtaned by using two guest rooms at the rear of the property. If the laundry is outsourced, the laundry room can be converted to guest rooms Conversion costs would be about S30,000 for furnishings (bed, drapes, table, television, etc.), fixtures (lights, toilet, shower, etc.) and flooring. Rooms are remodeled every seven (7) years Laundry supplies (detergent, bleach, etc.) were estimated using a regression model for all cleaning supplies. You have determined that the variable cost is S0.19/rental. Variable costs for laundry room water, gas and electric were estimated at S0.12/rental. Reviewing financial and operational data you learn that repair costs averaged S4,725 annually over the past five years. The is supervised by the Head Housekeeper and 25% of her wage allocated to the laundry department. The head housekeeper is paid S9.30 per hour and works full time (2,000 hours annually). The laundry worker is paid $8.06 per hour. The laundry room can process 80 pounds of laundry per hour Required 1. Use the relevant cost framework to analyze the outsourcing decision if you expect 60% 2. Re-do the analysis with the assumption that occupancy remains the same next year 3. What qualitative factors should be considered? What should you do