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 2015 budget is as follows EEB Click the icon to view the budget table Make an assumption that there are 2 workers and 1 supervisor in the firm The total cost per year of the insourcing option is $. (Enter your response as a whole number) The total cost per year of the outsourcing option is $ (Enter your response as a whole number.) More Info Direct expenses Wages Benefits Maintenance, repair, and operating supplies Indirect expenses Supervisor salary Benefits Other office expenses $3,500 per worker per month 25% of wages per worker per month $4,000 per worker per month $6,000 per supervisor per month 60% of wages per supervisor per month $1,000 per supervisor per month PrintDone

Answer 1

The total cost per year of the insourcing option is $199,200, while the total cost per year of the outsourcing option is $300,000.

Step-by-step explanation:

To determine the total cost per year of the insourcing option, we need to calculate the direct and indirect expenses. Direct expenses include wages, benefits, and maintenance, repair, and operating supplies. For the insourcing option, there are 2 workers and 1 supervisor. So the total direct expenses per month for workers would be 2 * $3,500 = $7,000 and for the supervisor it would be $6,000. The total indirect expenses per month for the supervisor would be 60% of the supervisor's wages, which is 0.6 * $6,000 = $3,600.

To calculate the total cost per year of the insourcing option, we multiply the monthly direct and indirect expenses by 12. So the total direct expenses per year for the workers would be $7,000 * 12 = $84,000 and for the supervisor it would be $6,000 * 12 = $72,000. The total indirect expenses per year for the supervisor would be $3,600 * 12 = $43,200. Therefore, the total cost per year of the insourcing option would be $84,000 + $72,000 + $43,200 = $199,200.

To determine the total cost per year of the outsourcing option, we simply take the given value of $300,000. Therefore, the total cost per year of the outsourcing option is $300,000.