Question

Granville Community College is considering outsourcing the maintenance of its buildings and other facilities to an outside firm for $300,000 per year. The 2020 budget is as follows: Granville Maintenance Budget-2020 Direct expenses (per worker) • Wages—$2,500 per worker per month • Benefits—35% of wages per worker per month • Maintenance, repair, and operating supplies—$2,000 per worker per month Indirect expenses • Supervisor salary—$3,000 per month • Benefits—40% of wages • Other office expenses—$500 per month a. (*) Calculate the total costs of insourcing versus out- sourcing maintenance b. (**) What other reasons, other than costs, might Gran- ville look at when deciding whether to outsource maintenance activities?

Answer 1

Q1) Granville Community college- © Insourcing: Directenpenses - 2500X12 + 35 x 2500X12 + 2000X12 - $ 64560 Indirect enpenals = 3000112+ 40x3000 x12 +500x12 - $56400 Total cost of insourcing = 64500+56400 = $120900 = Total cost of outsourcing - $300,000 1 Other reasons are:- al Control the company can hawe on activities. (i) How of information to a third party. City Quality of work