Question

Humphrey Sports is considering outsourcing its maintenance work. The total labor cost for the maintenance department is $150,000, and the company has an offer from Robyn Maintenance to provide the service for $125,000. The maintenance equipment currently used by Humphrey cannot be sold and has annual depreciation of $10,000. The overhead allocated to the maintenance department is $20,000 per year and would not be avoidable. If the maintenance work is outsourced, all of Humphrey’s maintenance workers will be terminated.

Required
Based on the information given, what should Humphrey Sports do with respect to outsourcing its maintenance work?



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  • CreatedMarch 11, 2015
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