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Question - Oakland College is considering outsourcing grounds maintenance. In this regard, Oakland has received a bid from Highline Grounds Maintenance for $308,700 per year. Highline states that its bid will cover all services and planting materials required to "keep Oakland's grounds in a condition comparable to prior years." Oakland's cost for grounds maintenance in the preceding year were $317,690 as follows:
Salary of three full-time gardeners
$204,030
Plant materials
81,460
Fertilizer
8,880
Fuel
8,740
Depreciation of tractor, mowers, and other
miscellaneous equipment
14,580
Total
$317,690
If Oakland College outsources maintenance, it will be able to sell equipment for $34,300, and the three gardeners will be laid off.
Analyze the one-year financial impact of outsourcing grounds maintenance.
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