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# \$1.75procesing and fixed costs

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sUSan Meyer of Meyer's Motor Court in Key West, is considering outsourcing daily room clean-up

of the motel to Duffy's Maid service.  Susan rents an average of 50 rooms for each of the 365 nights( 365 x 50=total rooms rented for the year)  Cost to clean a room is \$12.50.Maid Service is \$18.50 per room plus a fixed cost of \$25,000 for sundry items  such as uniforms with the motel's name.  The annual fixed cost for space, equipment and supplies is \$61,000.  Which is the preffered process for Susan and why?

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Preview: ... 12 .50+\$ 3.34=\$15.84-------(a) Option 2:- Total  Fixed cost=\$25 ,000 Hence, Fixed cost per room per day=25000/(50x365) = 1.87\$ Total cost of cleaning o ...

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