Midtown Clinic provides its own housekeeping services. The…
Midtown Clinic provides its own housekeeping services. The clinic director would like to outsource this service, and has found a company that will provide the service for $24 per hour. The following information has been collected about the cost per hour to the clinic for performing its own housekeeping services: (9 pts. total) Cost per hour of service: Cleaning supplies $ 2 Direct labor $17 Variable overhead $1 Total fixed overhead $35,000 Total hours of housekeeping services per year 2,600 Should Midtown Clinic outsource housekeeping, assuming that $20,000 of fixed costs can be eliminated if the service is outsource? What is the financial benefit to Midtown for the decision you selected? (5 pts.) Describe a qualitative factor that might affect this outsourcing decision (4 pts.)