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(Solved): Whispering Winds College provides its own housekeeping services. The College director would like to ...



Whispering Winds 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 Direct labour costs Variable overhead Total hours of housekeeping services per year Total fixed overhead (a) Number of hours: 3,250 Cleaning supplies Direct labour Variable overhead Determine whether Whispering Winds 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). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) Fixed costs Purchase price Total cost $3 In-house $27 $2 3,250 $45,560 Outsource $ Net Income Increase (Decrease)

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Whispering Winds 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 per hour. The following information has been collected about the cost per hour to the college for performing its own housekeeping services: (a) Determine whether Whispering Winds College should outsource housekeeping assuming that 50 K of fixed casts can be eliminated if the service is outsourced. If an amount reduces the net income then enter with a negative sign preceding the number, ey-15,000 or patenthess, es (15,000). While alternate opprooches are possible, irrelevant fixed costs should be included in both options when solving this problem)


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The net income for the company is decreased by $9,690, if the company outsource the services.
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