Big State University (BSU) is considering whether or not it should outsource its housekeeping service. Currently, BSU employs 400 housekeepers at an average annual wage of $23,000 plus another 39 percent for fringe benefits. Annual fixed costs associated with housekeeping are $1,278,800. Eric's Efficient Cleaners (EEC) will provide similar housekeeping for a fixed annual cost of $7,500,000 plus a variable cost of $20,000 per housekeeper required. Because Eric uses state-of-art equipment and well-trained employees, his company would need only 80 percent of the current BSU housekeeper staff (or 320 housekeepers).

Calculate the annual costs of 1) BSU using its current housekeeping staff and 2) EEC alternative.