Question

The chief financial officer of Robinson College, a small, highly selective liberal arts school, has determined that a member of Wobbekind Cleaning’s staff can clean an average of 20 dorm rooms each day. Bay View Dorm, the school’s newest dorm, has 100 rooms and is projected to be 80 percent full during the spring semester (January to May). During the summer term (June to August), the dorm is used only for summer camps and so is projected to be only 50 percent full. During the fall semester (September to December), the dorm is projected to be 100 percent full. Each occupied room is cleaned daily. Robinson College outsources all housekeeping activities to Wobbekind Cleaning. Wobbekind charges Robinson College $2,000 per month for each janitor employed on the school’s behalf. The company’s policy is to hire janitors on a full-time basis only. Although this policy results in some inefficiency, the tight labor market dictates this policy.

Required
A. Compute the cost for housekeeping service for Bay View Dorm for the spring semester, summer term, and fall semester.
B. What cost behavior pattern best describes housekeeping costs for Bay View Dorm?
C. What factors are important in predicting housekeeping costs for Bay View Dorm?



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  • CreatedMarch 11, 2015
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