Tim Urban, owner/manager of Urban\'s Motor Court in Key West, is considering out
ID: 461799 • Letter: T
Question
Tim Urban, owner/manager of Urban's Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to Duffy's Maid service. Time average of 50 rooms for each of 365 nights (365 times 50 equals the total rooms rented for the year). Tim's cost to clean a room is $12.50. The Du^sMa.d Serv is $18 00 per room plus a fixed cost of $26,000 for sundry items such as uniforms with the motel's name. Tim's annual fixed cost for space, equipment, and such $61,000. Based on the given information related to costs for each of the options, the crossover point for Tim = 6364 room nights (round your response to the nearest M number). If the number of room nights is less than the crossover point, then is the best option available to Tim.Explanation / Answer
If the number of room nights is less than the crossover point, the outsourcing is the best option available for Tim. This is because the overall cost will be less.