You are the manager in charge of Yoda Medical Center, a fine hospital on the far moon of Endor! Currently you are spending $14000.00 per month renting an industrial washer and dryer from the Vadar Equipment Emporium. Because of the size of your hospital , your staff does 11000 loads of laundry each month. The cost of the employee who loads the washer, transfers clothes to the dryer, removes the clothes from the dryer, folds them and puts them into the linen closet comes to $2.50 per load. The Hans-Solo Linen Company has offered to do your laundry for $19500 per month. You have determined that the cost for your staff to transfer the dirty laundry to Hans-Solo, check in the clean linens from Hans-Solo and put them into the linen closet would be $1.35 per load.

Situation A: You have read over the Vadar Company lease and there is a clause where you can return the washer and dryer and only pay Vadar $7000 per month. Hence even if Hans-Solo does your laundry you still must pay Vadar the $7,000 each month. Should you do your own laundry or let Hans-Solo do it? What is your change in income if Hans-Solo does your laundry? What is the break even number of loads?

Situation B: The First Order Clinic down the street is willing to sub-lease your washer and dryer for $8500 per month. Unfortunately, the lease with Vadar requires that the machines stay in your hospital so you would still have to pay Vadar the $14000 per month. The First Order Clinic will do 3000 loads per month, and you have determined your labor cost of monitoring the First Order employees in your hospital will come to $0.25 per load. Given this situation should you a) continue to do your own laundry, b) return the equipment to Vadar and use Solo for your laundry or c) keep the equipment,( and pay Vadar $14,000), let Solo do your laundry and sub-lease the equipment to The First Order? NOTE: due to time constraints, it is not possible for you and The First Order to both use the Vadar equipment.

MAY THE ACCOUNTING FORCE BE WITH YOU AS YOU DO THIS PROJECT.

YOU NEED TO WRITE 2 MEMOS [ONE FOR EACH SITUATION] TO THE CEO OF THE HOSPITAL DR. LUKE SKYWALKER WITH YOUR RECOMMENDATION. YOUR MEMO SHOULD ALSO INCLUDE THE NON-FINANCIAL FACTORS THAT NEED TO BE CONSIDERED ALONG WITH THE FINANCIAL ANALYSIS.