Reference no: EM132510106

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 $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       $3
Direct labour costs     $27
Variable overhead               $2
Total hours of housekeeping services per year     3,120
Total fixed overhead        $51,840

Question1 : 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).)