Question

State Hospital is considering outsourcing its maintenance work. The total labor cost for the maintenance department is $200,000, and the hospital has an offer from Jenny Maintenance to provide the service for $150,000. The maintenance equipment currently used 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.

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



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  • CreatedMarch 11, 2015
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