What will savings be in the second year?
- State University is considering hiring an outside company for its grounds maintenance. In this regard, State University has received a bid from Mackin Services. Mackin states that its bid of $410,000 will cover all services and planting materials required to “keep State University’s grounds in a condition comparable to prior years.” State University’s cost for grounds maintenance in the preceding year was $412,000 as follows:
Salary of three full-time gardeners $295,000
Plant materials 80,000
Fertilizer 9,000
Fuel 8,000
Depreciation of tractor and mowers 15,000
Total $412,000
If State University hires Mackin, it will be able to sell its other equipment for $30,000, and the three gardeners will be laid off. What will savings be in the second year?
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